The words of the stock market,
explained simply.

Bond

A bond is a loan made to a government or a company: in return you receive interest (coupons) and, at maturity, your capital back.

Bull market and bear market

A bull market is when prices rise for a long time, and a bear market when they fall at least 20% from their highs.

Compound interest

Compound interest is the effect whereby reinvested gains in turn generate further gains: capital grows faster and faster.

Cryptocurrencies

Cryptocurrencies, such as Bitcoin and Ethereum, are digital currencies based on the blockchain, a public ledger that doesn't depend on a central bank.

Diversification

Diversifying means spreading your capital across several stocks, sectors, countries and asset classes, so as not to depend on the performance of just one.

Dividend

A dividend is the part of its profits that a company distributes to its shareholders, usually once or several times a year.

Drawdown (maximum decline)

Drawdown is a portfolio's fall from its highest point to the lowest point that follows: maximum drawdown tells you how much was lost at the worst moment.

ETF

An ETF is an exchange-traded fund that tracks an index, such as the FTSE MIB or the S&P 500: with a single purchase you invest in many securities at once.

Fees and costs

Fees are the costs you pay to buy, sell or hold an investment: broker, fund management, taxes and spread.

Forex (currency market)

Forex is the market where currencies are exchanged, such as the euro against the dollar: it is the largest financial market in the world.

Limit order

A limit order buys or sells only at a set price or better: if the market doesn't reach it, the order is not executed.

Market capitalisation

Market capitalisation is a company's stock market value: the share price multiplied by the number of shares.

Market order

A market order buys or sells immediately, at the first available price.

Portfolio and asset allocation

A portfolio is the set of your investments; asset allocation is how your capital is split between shares, bonds, cash and other instruments.

Return

Return is the gain (or loss) on an investment, expressed as a percentage of the capital invested.

Spread

The spread is the difference between the price at which a security can be bought (ask) and the price at which it can be sold (bid) at the same moment.

Stock

A share is a stake in a company's capital: whoever buys it becomes a shareholder and takes part in its profits and its risks.

Stock market index

A stock market index measures the performance of a group of securities, for example a country's largest companies: it is a market's thermometer.

Stop loss

A stop loss is an automatic sell order that triggers when the price falls below a threshold, to limit losses.

Volatility

Volatility measures how much a security's price fluctuates: the higher it is, the wider and more frequent the moves up and down.