Investing Terms

What is a "double bottom"? How can you "use leverage" in your trades, and how can it help you? Why are trades made each day, even after the market closes at 4:00?

The hardest part of investing for many beginners is understanding the complicated and occasionally confusing language that surrounds it. Many investing terms get their names from difficult financial jargon, while others come from subtle variations on expressions we use everyday. Still others are completely unique to  investing!

A good understanding of these investing terms is an important part of being an experienced investor, who knows how to incorporate his knowledge of the many situations, techniques, and metrics that they describe into his investing system. To a novice, however, the long list of investing terms can be so overwhelming that learning anything about investments feels impossible. If you're a novice, don't worry-- everything you need is right here. 

Below, you can find all the information you will need to familiarize yourself with the fascinating language of stock market investing.

After-Hours Trading

After-hours trading is undertaken on electronic market exchanges either before or after regular trading hours.»

How to Average Up

Buying more of your best stocks can be dangerous if misused.»

What are Considered Bull Markets and Bear Markets?

The markets are governed by two overarching macrotrends: major uptrends and major downtrends.»

What Does Buy-on-Stop Mean?

What does "buy-on-stop" mean? It's a trade order used to limit a loss or protect an existing profit. When would you use it?»

What Are Derivatives?

A derivative is a contractual agreement between two parties that has a value, based on expected future price movements. What does this mean, exactly?»

What Are Dividend Aristocrats?

Find out why dividend investors seeking safety and a steady stream of income gravitate toward the Dividend Aristocrats.»

What is a Double Bottom Chart Pattern?

A double bottom chart pattern is a chart pattern used in technical stock analysis. What does it tell you about the stock?»

Earnings Gaps

Here are our general guidelines on earnings gaps.»

What is Goodwill?

Investors should be wary when they see goodwill, like when a company pays more money for another company than the value of its net assets.»

High Frequency Trading

High frequency trading is only undertaken by the most sophisticated of traders—and those with considerable intestinal fortitude.»


Investment leverage comes in many forms: debt, margin, options and futures are the most common manifestations. »

Options Trading Terminology

Options comes with its own vernacular—covered calls, selling puts, the strike price, iron condors, etc.—that requires some getting used to.»

What is the Purchasing Managers' Index?

A well-informed investor always considers crucial economic indicators, such as the Purchasing Managers' Index, when making investment decisions. Why?»

Relative Performance - Investing Terms

By analyzing Relative Performance (RP) lines, you can identify the best companies with the strongest stocks, the market’s leaders.»

What is a Special Dividend?

A special dividend is a reward to shareholders, to engender loyalty. However, a special dividend can also serve the strategic interests of management. »

What is Spread Trading?

A spread trade is a way for investors to use leverage, by which they can make a big profit (or loss) from a relatively small investment. How does it work?»

Trading Volume, Why is it So Important?

Next to price, trading volume is one of the most closely watched stock market indicators. Why you should watch it too, and why scam artists do.»

Stock Picks


This stock could rise 50% before becoming fairly valued.

This hot technology company is growing like a weed, thanks to products that speed up cloud communications.

This stock is somewhat well known, but far from well loved.

Cabot Wealth Advisory

Targeting Upside in PayPal Stock

By Jacob Mintz on October 25, 2016

PayPal stock is trending higher after last week’s strong earnings report, with plenty of upside. Here’s how options traders can take advantage of that potential.Read More >

Nine Characteristics of Great Growth Stocks

By Timothy Lutts on October 24, 2016

Recommending great growth stocks is our specialty at Cabot. But so is education--we want you to be able to find growth stocks on your own too. Here are nine characteristics of what to look for.Read More >

How to Find Great Growth Stocks in a Scary Market

By Paul Goodwin on October 21, 2016

Even in today’s scary market, there are great growth stocks out there. Here’s how to find them—and how to avoid the kind of losses that can haunt your portfolio.Read More >