Stock Market Glossary
Authoritative definitions of every term active equity traders and investors need — short squeeze mechanics, float, post-PDT intraday margin (RN 26-10), pre-market dynamics, VWAP, earnings reports, and more. Each entry includes examples and links to the free tools that apply the concept.
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Bid-Ask Spread
The bid-ask spread is the ask minus the bid. Bid is the highest price a buyer will pay for a specified number of shares; ask is the lowest price a seller will sell.
Circuit Breakers & Trading Halts
Circuit breakers are automatic, exchange-mandated trading pauses triggered when market prices decline by predetermined thresholds, while trading halts are discretionary or regulatory pauses in individual securities due to pending news, volatility, or technical issues.
Float
Float is the number of shares of a company's stock that are available for public trading in the open market, calculated by subtracting insider holdings, restricted shares, and closely-held shares from total shares outstanding.
Implied Volatility (stocks)
Implied volatility is expected future volatility of the option’s underlying at expiration, reflected in the current option premium. It is not historical volatility and not a formula this page invents.
Level 2 Quotes
Level 2 quotes display the full depth of the order book for a stock — all outstanding bid and ask orders beyond the best inside bid and ask, showing the price and size of orders at multiple price levels across all market makers and electronic venues.
Limit Order
A limit order buys or sells a security at a specific price: buy at the limit or lower, sell at the limit or higher. It may rest, partial-fill, or expire unfilled.
Market Order
A market order buys or sells a stock at the current market price. You are almost always filled if buyers and sellers are there; the executed price may not be the price you expected.
Options Chain
An options chain is the displayed grid of listed calls and puts by strike and expiration. OPRA collates quotes from all U.S. options exchanges into the NBBO — not a single-venue print.
Pattern Day Trader Rule
The Pattern Day Trader (PDT) rule is a former FINRA day-trading framework (4 day trades / $25,000 equity). RN 26-10 replaced it with Rule 4210(d)(2) intraday margin, effective June 4, 2026.
Pre-Market & After-Hours Trading
Pre-market trading occurs before the official NYSE/NASDAQ open (9:30 AM ET) from 4:00-9:30 AM ET, and after-hours trading occurs from 4:00-8:00 PM ET after the close, both featuring lower liquidity, wider spreads, and price discovery driven primarily by earnings announcements and breaking news.
Short Interest
Short interest is the total number of shares of a stock that have been sold short and not yet covered or closed out, expressed as an absolute share count and as a percentage of float, serving as a measure of bearish market sentiment toward a security.
Short Squeeze
A short squeeze is a rapid, self-reinforcing price surge driven by short sellers being forced to buy shares to cover losing positions, amplifying upward price momentum far beyond what fundamental catalysts alone would produce.
Fundamental Analysis
Dividend Payout Ratio
investor.gov defines a dividend (portion of profit paid to shareholders), not a payout ratio. The common dividends-over-earnings fraction is TODO:VERIFY — not official.
Dividend Yield
Dividend yield is the annual dividend paid by a company expressed as a percentage of the current share price, representing the cash return an investor receives from dividends alone, independent of any price appreciation or depreciation.
EBITDA
EBITDA is earnings before interest, taxes, depreciation and amortization. SEC staff C&DI Q.103.01: earnings means GAAP net income; differently calculated measures must not be called EBITDA.
ETF (Exchange-Traded Fund)
A 1940 Act ETF registers as an open-end investment company or a unit investment trust. Shares trade at a market price that may not equal NAV. Not ETNs or commodity trusts.
Earnings Per Share (EPS)
Earnings Per Share (EPS) is the portion of a company's net profit allocated to each outstanding share of common stock, calculated by dividing net income by the weighted average number of diluted shares outstanding, serving as the primary measure of corporate profitability on a per-share basis.
Earnings Report
An earnings report is the issuer's published results. Form 8-K, the current report, can carry a preliminary announcement; periodic results also live in the 10-Q and 10-K. Not beat-or-miss math.
Growth Stock
Growth stocks have earnings growing at a faster rate than the market average. They rarely pay dividends and investors buy them in the hope of capital appreciation. Not a growth-factor formula.
IPO — Initial Public Offering
An Initial Public Offering (IPO) is the process by which a private company first offers shares to the general public on a regulated stock exchange, raising capital and enabling founders, employees, and early investors to achieve liquidity for their ownership stakes.
Market Capitalisation
Market capitalisation is the total market value of a company's outstanding shares, calculated by multiplying the current share price by the total number of shares outstanding, used to classify companies as large-cap, mid-cap, or small-cap and to weight stocks in indices.
P/E Ratio
The Price-to-Earnings (P/E) ratio is the most widely used equity valuation metric, calculated by dividing a stock's current market price by its earnings per share (EPS), indicating how much investors are willing to pay for each dollar of current earnings.
Reverse Stock Split
A reverse stock split converts each share into a fraction of a share. Official EXAMPLE: 1-for-10 turns 10,000 shares into 1,000. Small holders may be cashed out.
Stock Buyback
10-K/10-Q Item 5 requires disclosure of issuer purchases of equity securities. investor.gov stock-buyback and share-repurchase glossary slugs are empty stubs — not definitions.
Stock Split
A stock split increases outstanding shares and lowers price per share in proportion, leaving the economic claim unchanged. Official EXAMPLE: 100 shares at $100 become 200 at $50.
Risk Management
Beta
Beta is a statistical measure of a stock's volatility relative to the overall market (typically the S&P 500), where a beta of 1.0 indicates the stock moves in line with the market, above 1.0 indicates amplified market movements, and below 1.0 indicates lower sensitivity to market swings.
Intraday Margin Requirements (post-PDT)
Intraday margin (FINRA Rule 4210(d)(2), RN 26-10) is the post-PDT standard: members measure an intraday margin deficit on margin accounts after IML-reducing trades. No PDT flag, no $25,000 day-trade floor.
Margin Account
A margin account is a brokerage account in which the broker-dealer lends cash, using the account as collateral, to purchase securities. Purchasing power rises; larger losses are possible. PDT is not current law.
Stop-Loss Order
A stop order buys or sells a stock once the stop price is reached; it then becomes a market order. The fill may differ from the stop, especially in a fast market.
Technical Analysis
52-Week High & Low
The 52-week high and low are the highest and lowest prices at which a stock has traded during the preceding 52 calendar weeks, serving as widely referenced technical reference points for momentum assessment, breakout identification, and mean-reversion analysis.
VWAP (Stocks)
VWAP (Volume-Weighted Average Price) is the average price of a stock weighted by trading volume over a specified period, typically the current trading day, used by institutional traders as a benchmark for execution quality and by technical traders as a dynamic support and resistance level.
Why Equity Traders Need Precise Definitions
U.S. equity trading has its own language. Exchanges, brokers, and educators throw around terms like float, VWAP, short squeeze, and intraday margin as if everyone already knows what they mean. Many traders — including experienced ones — mix current FINRA margin rules with the old Pattern Day Trader framework, and those mix-ups change how they size a trade.
This glossary covers the concepts that matter most to active stock traders: how float and short interest interact, how session hours differ by venue, and how FINRA RN 26-10 replaced the PDT 4-day-trade / $25,000 floor with Rule 4210(d)(2) intraday margin (effective June 4, 2026; phase-in through October 20, 2027). PDT is historical. Every definition includes a practical example and links to free calculators so you can apply the concept.
Educational only — not personalized investment advice. Use the DennTech blog alongside this glossary for deeper dives, and use the free tools to put every concept to work.