Stock Terms

You should know these terms in order to enter the stock trading

Share beginners often have problems finding their way around in the jargon of the stock market world. Many also shy away from simply looking up the words because they think the time involved is too great.

For those who want to make rapid progress, we have compiled our stock glossary for beginners. It explains the most important terms briefly and concisely, so that it can help to understand specialist articles better and more easily. This way, especially beginners can better prevent unnecessary and costly mistakes when investing money.

  • Most important terms from the world of shares
  • Focus on stock exchange terms
  • Short descriptions
  • Alphabetical order for quick orientation

You should know these terms in order to enter the stock trading

Share beginners often have problems finding their way around in the jargon of the stock market world. Many also shy away from simply looking up the words because they think the time involved is too great.

For those who want to make rapid progress, we have compiled our stock glossary for beginners. It explains the most important terms briefly and concisely, so that it can help to understand specialist articles better and more easily. This way, especially beginners can better prevent unnecessary and costly mistakes when investing money.

  • Most important terms from the world of shares
  • Focus on stock exchange terms
  • Short descriptions
  • Alphabetical order for quick orientation

Our tip: With Ctrl + F you can enter the search terms in your browser and search our stock glossary. This will help you find the terms much faster.

A-Share

As A-shares are traded on the Shenzhen and Shanghai stock exchanges and have long been reserved for domestic investors. Some companies also issue A-shares in contrast to B- or C-shares without voting rights.

Release form

The demand for a share is significantly lower than the supply, which results in a price loss.

Tendency to sell

Less pronounced delivery pressure.

Discharge rate

At this interest rate, the Bundesbank offers short-term money market paper from federal companies or the Federal Republic itself.

Ad hoc announcement

If circumstances change in the company that could influence the share price, public limited companies must publish these changes. The aim of this law is to ensure a uniform supply of information to all market participants.

Share premium

Issue surcharge. Usually given in percent. Difference between nominal value and actual market value.

Share

A share is a document that certifies the holder’s claim to a certain share of the assets of a joint stock company.

Stock corporation (AG)

Trading company whose share capital is divided into shares. Must not be listed on the stock exchange.

Bonds

Debt securities which bear fixed interest. Are issued by both public authorities and private companies to finance investment projects,

Arbitrage

Exploitation of price differences on different stock exchanges at the same time and for the same underlying asset.

bear market

Declines in stock market prices that last or are pronounced over a long period of time. Also: bear market.

bonus shares

Issued when a stock corporation converts reserves into share capital entitled to dividends. Usually in the case of strong reserve accumulation which leads to an optically too “expensive” stock market price. The equity capital of the AG does not change as a result, and the shareholder’s share in it also remains unchanged. Also: increase shares and additional shares.

Blue Chips

Shares of the world’s largest companies.

Bonus

Special compensation paid in addition to the dividend.

Stock Exchange

Specialized market place, which is usually controlled by the financial authorities. In addition to the stock exchange there are also commodity exchanges or exchanges for financial derivatives.

Stock exchange index

Indices try to reflect the development of the stock market. To do so, they usually focus on the most important parts of a trading market.

Stock exchange

Place where securities are traded.

Asked price

The ask price is the selling price. The counterpart is the bid price. Also: Ask, Asked Price, Offer Price

Call

Purchase option. The buyer thereby acquires the right to purchase a certain underlying asset in an agreed quantity. The actual form of the call depends on the derivative used.

Cash flow

Cash inflow. Important profit figure in fundamental analysis.

Chart

Graphical representation of the share price.

Churning

Type of fraud: Diversion of a portfolio by an asset manager in order to obtain the highest possible fees for the manager.

Corner

Coordinated action of several speculators to create a bottleneck in the market and thus drive up the price.

Cost-average effect

Average cost effect. If the investment is spread over several purchase dates over a longer period of time, the result is an average price that compensates for both advantageous and disadvantageous rates at the time of purchase.

Brokerage fee

Broker’s commission of the broker when buying or selling shares, usually in percent.

Fund of funds

Fund that invests in various funds itself.

DAX

Share index of the 30 most important German stocks.

Deflation

The volume of money in an economy decreases, which increases purchasing power. The demand is permanently below the supply (sustainable overcapacity). Opposite: Inflation

Where to open a securities accountDepot

Place where securities are held is increasingly used in a figurative sense because most shares are held centrally.

Custodian Bank

Custodian banks hold the special assets of fund companies in safe custody.

Custodian voting right

Shareholders usually have voting rights at general meetings in the amount of their share of the share capital. They can transfer this to the depositary bank

Derivatives

Leveraged financial instruments where the investor does not acquire the share himself, but the right to it.

Foreign exchange

Receivables in foreign currencies.

Discount

Discount on the issue price.

Diversification

Risk diversification. In the case of equities, diversification is achieved through risk carriers with low correlation. Possible mechanisms are different regions, sectors or currencies.

Dividend

The proportion of the profit distribution of the stock corporation attributable to one share. The Annual General Meeting decides on the amount.

Dividend deduction

Calculated discount on the share price in the amount of the dividend.

Dividend guarantee

Guaranteed minimum dividends for non-voting preferred shares.

Double taxation agreement

Agreements between the Federal Republic of Germany and other countries to prevent double taxation of domestic and foreign income.

Dow Jones

Share index of the 30 most important shares on the US stock exchange. Of enormous importance and the world’s best-known stock market index, composition and weighting are purely subjective, however.

Triple Witches’ Sabbath

Third Friday in March, June, September and December. Last trading day for DAX future, stock options and DAX options, which can mean significant price changes.

DFVA result

Profit or loss calculation according to a standardized formula of the German Association for Financial Analysis and Investment Consulting.

Ebit

Abbreviation for earnings before interest and taxes, i.e. the profit of a stock corporation before interest and taxes and extraordinary result.

EBITDA

Abbreviation for earnings before interest, taxes, depreciation and amortization. This is the earnings before interest, taxes, depreciation and amortization.

Securities

Collective term for tradable and fungible securities, including shares, derivatives and bonds.

Securities giro transactions

Enables the pieceless transfer of effects. The securities are held in collective custody at a securities depository and are then only transferred in book-entry form, not actually.

Proprietary trading

Securities orders from banks for own account.

Equity ratio

Determines the ratio of equity to total capital. A low equity ratio enables profitability and growth to be increased, but also has a higher risk, especially as interest is incurred.

Cover up

Clearing of empty positions by buying the previously sold empty values.

Issue

Publication of securities.

Issuer

Publisher of securities such as shares, bonds, funds or derivatives.

Withdrawal plan

Counterpart to the savings plan: The investor gradually withdraws assets from his portfolio.

Opening price

First determined price of the trading day.

Income, extraordinary

Income from the sale of units or proceeds from subscription rights for funds.

Income, ordinary

Interest and dividend income from funds

Escorting

Share prices adjust to the probable change even before the actual event.

ETF

Exchange Traded Funds: A passively managed fund that is traded on the stock exchange and tracks an index.

Euribor

European Interbank Offered Rate: Most important reference interest rate for Euro bonds. Determined by the ECB, determines what interest rate EU banks charge each other when trading deposits.

Euro-STOXX

Stock market index for the 50 largest European companies in the euro zone. Most important barometer for the European stock index.

Ex D, Ex Div, without dividend

First share price (note) after payment of the dividend.

Ex BA, without bonus shares

First share price (note) after conversion to the adjusted share capital.

Ex B, EX BR, EX Bez, xB, Ex subscription right

First share price without subscription rights.

Exit

Exit of an investor from a company. It is possible to sell the investment to another company, another investor or the management. An initial public offering is also possible.

Financial investment

Shares in affiliated companies, loans to affiliated companies or investments in affiliated companies.

Financial liabilities

All interest-bearing obligations of a stock corporation on the balance sheet date.

Flash crash

Sharp price falls that last only a few minutes.

Fund Manager

Manager of an investment fund, who makes investment decisions within the framework of the conditions and principles established for the fund.

Fund rating

Attempt by specialized rating agencies to evaluate different funds not only quantitatively but also qualitatively.

Claims

Claims of a company for payments not yet affecting liquidity.

Research and development costs

Key figure in the profit and loss account that indicates the company’s innovation efforts.

Outside capital

Debt capital is assets that are not owned by the stock corporation.

Fundamental Analysis

Fundamental analysis attempts to compare the most important business data of different companies with each other and to analyze them under consideration of economic data in order to be able to estimate the market potential and value of a share.

bid price

share price, buyers would also buy securities. Also: “Bid” price.

Money Market

Market for banks on which short-term loans or deposits are traded.

Profit Participation Certificate

A security that represents an intermediate form between a share and a bond: The investor has no voting rights, but is entitled to a share of the profits. Participation in losses is also possible.

Closed-end fund

A closed-end fund enables the investor to make an entrepreneurial investment: A defined project can be realized by the launch. The money is invested for a defined term. In case of failure, investors can be held liable

Deleted

Price supplement. Refers to the deletion at the instigation of the admissions office. Possible reason is that the issuer has not fulfilled the prescribed publication obligation.

Profit

Profit or loss is an interim result in the income statement of the consolidated financial statements. Profit definitions may have different meanings and are not fully comparable.

Earnings per share

Key figure that indicates the amount of profit that a stock corporation can generate per share. It thus indicates the earning power per share.

Profit-taking

Falling prices, which cannot be explained by an event or other reasons, can be profit-taking by investors, who secure accrued price gains.

Earnings yield

Reciprocal value of the P/E ratio (price-earnings ratio), which indicates the interest on the share. Describes the ratio of earnings per share to the current share price.

Closing

Liquidation of a stock position by its sale.

bonus share

Misleading term for bonus share.

Grey Capital Market

Unregulated capital market that is not controlled by the state. Among other things, unlisted shares, closed-end funds and bonds are traded. Due to the lack of minimum standards, these markets are often significantly riskier, especially since dubious providers are also active there.

Share capital

Sum of the nominal values of all issued shares.

Trading as of Publication

An over-the-counter trade in newly issued shares before they can be delivered and settled.

Annual General Meeting

The highest decision-making body of a public limited company and meeting of all shareholders with voting rights in a public limited company. The appointment of the supervisory board and the appropriation of profits are essential tasks of the general meeting. Amendments to the articles of association, capital increases, liquidation or the discharge of the Supervisory Board and the Executive Board are also decided here.

Bull market

Medium to long-term increase in the prices of a stock exchange or a sector. Also: bull market. The opposite: bear market.

Bull market

Investor who builds up long positions because he expects a positive price development.

Where to open a securities accountLeverage

Use of borrowed capital to increase the return on own capital.

Hedging

Hedging of securities positions by taking the counter position. To mitigate a negative price development or even make it profitable. Usually strongly leveraged.

Highflyer

Share with very high price gain. Often artificially fired by speculators and cannot be explained by current earnings.

IAS

Abbreviation for International Accounting Standard. Designates a uniform standard for the preparation of annual reports.

Inflation

Monetary devaluation, recognizable by a permanent increase in the price level of end products. Demand exceeds supply. Opposite: Deflation

Duty to inform

All listed stock corporations must communicate key data and important events and developments transparently to investors. Also affects issuers.

Bearer shares

All rights associated with the security can be exercised by the purchase without the need to change the entry in the shareholders’ register (as in the case of registered shares). Most frequently traded type of share.

Insider trading

Illegal trading activities of persons or institutions that want to exploit a knowledge advantage through investments.

Insolvency

The occurrence of insolvency of a company. Also: bankruptcy.

Institutional investors

All legal entities that invest.

Intraday trading

Buy and sell a security on the same trading day.

Net income for the year

Net profit of the company.

Financial statements

Standardized report on the commercial results of a company in a specific financial year.

Joint venture

Joint venture between two independently operating companies, often to exploit synergy effects.

New shares

Shares issued in the course of a capital increase, the publication date of which is after the old shares.

Capital employed

The money to be raised for the purchase of the share.

Capital increase

Increase in equity through the issue of new shares. Existing shareholders usually receive subscription rights for the new shares thus issued.

Capital gains tax

Forerunner of the final withholding tax.

Capital Market

Market for long-term loans and equity capital.

Capital cut

Nominal reduction of the capital of a distressed AG with simultaneous capital increase. Necessary if the capital stock is no longer sufficient.

Cash trading

Transactions that must be fulfilled immediately. Opposite: Futures trading

spot rate

Formerly officially determined price once a day. Has lost importance.

KGaA

Partnership limited by shares. Special form of an AG with a personally liable partner and non-personally liable limited shareholders.

KGV

Price/earnings ratio: Indicates how the company’s profit stands in relation to the current stock market valuation.

Compensation

Bank executes orders without stock exchange. In Germany, there is a stock exchange requirement, so the customer must explicitly allow the offsetting.

Consolidation

End of an upward movement of share prices.

Where to open a portfolioCorrelation

Measure of the dependence of the price of two investments on each other.

Course

Price of a security in official trading.

Price markdown

Arithmetical decline in the share price due to a distribution such as a dividend or the end of subscription rights.

Stockbroker

Officially appointed and sworn brokers who determine the prices.

Price maintenance

Support of a price by purchases on own account.

Exchange rate

Price of a security estimated by a broker for which there is not enough trading.

Market value

Corresponds to the stock market price on the reporting date and is intended to enable the tax valuation of shares.

Short sale

Sale of shares without owning them.

Light share

share, which appears particularly attractive due to its low price.

Limit

Maximum price at which a securities order may be executed.

Long position

Arises from the purchase of one share. Opposite: short position

Market capitalization

Current market value of a company. For this purpose, the share price and number of shares are multiplied by each other.

Minus announcement

Price supplement during over-the-counter trading, which signals a reduction in the price by at least five percent. Increase: double minus announcement (-) at 10%.

MSCI

Abbreviation for Morgan Stanley Capital International. The financial services provider is known above all for the calculation of many indices.

Subordinated capital

Liabilities that are not satisfied until all non-subordinated creditors have been paid out.

Secondary market

Trading in shares after the stock exchange is closed.

Registered share

Type of shares where the rights are issued in the name of the owner.

Second-line stocks

All stocks that are not blue chips (standard stocks).

Net dividend

Dividend amount minus the final withholding tax.

Nominal value

Also: nominal value. Indicates the amount by which the share participates in the share capital.

Order

Order to sell or buy securities. Is forwarded by the bank to the stock exchange.

Outperformer

Stocks or portfolios that outperform the benchmark index.

OTC

Over-the-counter-market: Off-exchange trading.

Par price

Price that exactly matches the nominal value of the security.

Floor

Place where stock exchange trading actually takes place. Floor trading has become almost meaningless due to computer trading.

Penny Stocks

Often highly speculative American stocks with a price of less than one US dollar.

Performance

Performance of a portfolio.

Plus Announcement

Price supplement in over-the-counter trading. Warns if the price deviates upwards by at least 5%. Opposite: Minus announcement.

Presence stock exchange

In contrast to the electronic stock exchange, it refers to a place where brokers trade.

Withholding tax

Capital income is taxed at the “source”, i.e. in the home country of the stock company.

Provisions

Money that is set aside for certain costs that can already be estimated.

Real time courses

Price transmitted in real time.

Return

The overall success of a capital investment.

Recession

Economic downturn, usually accompanied by price losses on the stock market.

Collective safe custody

Type of safekeeping for securities. Customer has no right of ownership of specific securities, but a right of co-ownership of the collective holdings.

Closing price

The last price of the day determined before the closing of the exchange.

Heavy share

Share with high market value.

Shares

English term for shares. Also: “stocks”

Short position

selling position. Usually uncovered in a short sale.

Special custody

Separate storage of shares in the Streifbanddepot.

Savings plan

A share or fund shares are usually acquired in fragments through regular installments. The savings rate remains the same.

Speculation

Investment to make a profit on (soon) resale.

blocking minority

Share of shareholders that can prevent important corporate decisions from being taken.

Spin-off

Spin-off of a part of a company into an independent company. Shareholders are usually compensated with shares of the new company.

Split

A share split turns a “heavy” share into a “light” share, i.e. more shares are issued to the shareholders.

Spread

Difference between bid and offer price.

Squeeze out

Procedure that forces small shareholders out of the company by means of cash compensation.

Common share

share with full voting rights at the Annual General Meeting.

Standard values

1 – Blue Chips


Stop Loss Order

Sell order, which is triggered when the price falls below a limit set in it.

Free float

Shares that are freely traded on the market.

Tender procedure

Auction in the issue of securities. Highest bidders are awarded the contract, with subscribers only being given a minimum price.

Accumulation

Reinvestment of interest or dividends.

Transaction costs

Fees that are incurred when buying and selling shares.

Takeover Offer

Concrete offer to purchase a company, usually contains an offered share price.

Oversubscription

The demand for a newly issued share exceeds the supply.

End of the month

The last trading day of the month.

Undervaluation

Share price appears low compared to the overall market or comparable shares.

Benchmark index

Also: Benchmark. Benchmark for the development of the value, usually in the form of an index.

Volatility

Usual range of fluctuation of a value.

Preferred share

The holder has no voting rights, but can often benefit from a higher dividend.

Wall Street

Street in New York, where the NYSE is located.

Security

A document that certifies certain rights.

Security identification number (WKN)

Six-digit number that uniquely identifies each security.

Xetra

The German electronic stock exchange trading system.

YTD

Year to date: Period from the beginning of the year to the current date.

Cycle

Regular fluctuations in value.

Conclusion: Stock terms explained – now you understand the technical language

The stock language can be a real challenge for beginners. Many terms are already familiar to new investors, because the stock language can also be found in the everyday life of customers. At least prospective customers, who more or less regularly read the financial part in the newspaper, might be missing only some more rare terms.

In our share glossary the most important terms for the share trade are easily understandable and above all briefly explained. By using it, you will be able to better understand most of the specialist articles and discussions and will also know some signal words. Above all, it is much easier to understand fundamental data or changes in shares and the learning curve rises much faster.

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