Make sense of markets, one term at a time.

Every term below has a one-line definition you can use in conversation, and a fuller explanation that takes about thirty seconds to read. Browse by category, or land here from the in-chat tooltip when MarketIntell mentions a term you don’t know yet.

49 terms across 7 categories.

The vocabulary every market participant needs from day one.

Bitcoin(BTC · btc)

Bitcoin (BTC) launched in 2009 as the first cryptocurrency. It's a decentralized digital money system — no company runs it, no government controls it. There will only ever be 21 million bitcoins, which is why people call it 'digital gold'. Most crypto market moves still anchor to BTC's price.

Related: Cryptocurrency · Wallet · Volatility

Cryptocurrency(crypto)

Cryptocurrency is digital money secured by cryptography and recorded on a public ledger called a blockchain. Anyone can hold it, send it, or receive it without permission from a bank. Bitcoin and Ethereum are the two biggest. Thousands of others exist, ranging from useful infrastructure to outright scams.

Related: Bitcoin · Wallet · DeFi · Stablecoin

Stock(shares · equity)

A stock (or 'share') is a slice of ownership in a public company. Buy one share of Apple and you own a tiny fraction of Apple. Stock prices rise and fall based on the company's performance, market sentiment, and the broader economy. Most stocks trade on exchanges like the NYSE or Nasdaq.

Related: Market Cap · P/E Ratio · EPS

Market Cap(mcap · market capitalization)

Market capitalization is the total dollar value of all outstanding shares (for a stock) or all circulating coins (for crypto). It's the cleanest size metric: a $10 stock with 1B shares is bigger than a $1,000 stock with 1M shares. Big-cap names move slower and are usually safer than small-caps.

Related: Stock · Cryptocurrency · Liquidity

Liquidity(liquid)

Liquidity measures how quickly you can convert an asset to cash without taking a price hit. Bitcoin and Apple stock are highly liquid — you can dump millions and barely move price. A small-cap altcoin or a thinly traded option can move 10% just from your order. Always check liquidity before sizing a position.

Related: Slippage · Market Order · Volatility

Volatility(vol · volatile)

Volatility is the size of price moves over time, usually expressed as a percentage. A stock that moves 1% a day is low-vol; Bitcoin moving 5% a day is high-vol. Higher volatility means bigger profit potential AND bigger risk. Options pricing depends heavily on volatility — see Implied Volatility.

Related: Implied Volatility · Beta · Risk-to-Reward Ratio

Bull Market(bullish · bull)

A bull market is an extended period — usually months or years — where prices keep climbing and most participants are buying. The term comes from how a bull attacks: thrusting its horns upward. Bull markets are when 'buy and hold' looks like genius. They eventually end with a top.

Related: Bear Market · Long

Bear Market(bearish · bear)

A bear market is the opposite of a bull market: prices fall, sentiment turns negative, and selling pressure dominates. The standard threshold is a 20% drop from recent highs. Bears are when 'buy the dip' starts losing people money. Often coincides with recessions, rate hikes, or sector blowups.

Related: Bull Market · Short · Drawdown

How professionals stay alive through losing streaks. The most important section here.

Risk-to-Reward Ratio(R:R · RR · risk reward)

Risk-to-Reward (often written R:R or RR) compares the potential profit of a trade against the potential loss. Calculated as: (target price − entry) / (entry − stop loss). Most pros won't take a trade with R:R below 2:1. Higher R:R lets you be wrong more often and still profit.

Related: Stop Loss · Take Profit · Position Sizing

Drawdown(DD)

Drawdown measures the decline from a peak to a trough in your account or a market. If you peaked at $10k and dropped to $8k, that's a 20% drawdown. It's the metric pros watch most — recovering from a 50% drawdown requires a 100% gain. Limiting drawdown is more important than maximizing return.

Related: Max Drawdown · Position Sizing · Bear Market

Position Sizing(position size · sizing)

Position sizing is choosing how much capital goes into a single trade. The classic rule: never risk more than 1–2% of your account on one trade. If your stop is 5% away, that means a position size of 20–40% of your account. Sizing right keeps you alive through losing streaks.

Related: Stop Loss · Risk-to-Reward Ratio · Drawdown

Leverage(leveraged · margin)

Leverage lets you control $10,000 of an asset with only $1,000 of your own (10× leverage). Profits and losses both scale by the leverage factor. A 10% adverse move on 10× leverage wipes you out. Crypto perps offer up to 100×; most pros run at 2–5× and even that's aggressive.

Related: Position Sizing · Funding Rate · Drawdown

Diversification(diversified · diversify)

Diversification reduces risk by holding many uncorrelated positions instead of one concentrated bet. If you own 20 stocks across 5 sectors, no single blow-up wrecks you. Crypto traders diversify across BTC, ETH, and a handful of alts. The catch: too much diversification dilutes returns.

Related: Position Sizing · Beta

Beta(β)

Beta measures an asset's volatility relative to a benchmark (usually the S&P 500). Beta 1.0 = moves with the index; 1.5 = 50% more volatile; 0.5 = half as volatile; negative = moves opposite. High-beta names amplify both rallies and drawdowns. Tech and crypto tend to be high-beta.

Related: Volatility · Sharpe Ratio · Diversification

Sharpe Ratio(sharpe)

The Sharpe ratio divides excess return (return minus risk-free rate) by volatility. Above 1 is decent, above 2 is good, above 3 is exceptional. It's how pros compare strategies fairly: a 30% return with 50% vol (Sharpe ~0.6) is worse than a 12% return with 8% vol (Sharpe ~1.5).

Related: Volatility · Beta · Drawdown

Max Drawdown(MDD · max DD)

Max drawdown is the largest decline from peak to bottom over a measured period. If a strategy has a 35% max drawdown, you'd have been down 35% at the worst moment. It's the gut-check metric — most people overestimate the drawdown they can stomach until they're living through one.

Related: Drawdown · Sharpe Ratio · Position Sizing

Order types, position lifecycle, and the mechanics of getting in and out.

Long(go long · long position)

Going long means you own (or have agreed to buy) an asset and profit if its price rises. It's the default way most people invest: buy a stock, hold it, sell at a higher price. In leveraged products you can 'go long' without owning the underlying — your P&L still tracks price up.

Related: Short · Position · Entry

Short(go short · short position · shorting)

Shorting means you sell an asset you've borrowed, hoping to buy it back cheaper later. Your max profit is capped (price can only go to zero) but your max loss is theoretically infinite (price can keep rising). Risky and not for beginners. In crypto, you usually short via futures or perps.

Related: Long · Leverage · Funding Rate

Position(positions)

A position is your live exposure to an asset. 'I'm long 100 shares of NVDA at $450' is a position. Positions have an entry price, a size, and a direction (long or short). Closing the position locks in the profit or loss. Open positions are subject to ongoing market risk.

Related: Long · Short · Position Sizing

Entry(entry price · entered)

Your entry is the price you got filled at when you opened a trade. It's the anchor for every subsequent decision: stop loss is X% below entry, target is Y% above, etc. A good entry is rarely the absolute bottom — it's a price where your thesis still has room to play out.

Related: Exit · Stop Loss · Take Profit

Exit(exit price)

Your exit is where you closed the trade — either at your profit target, your stop loss, or somewhere in between. Pros plan their exit BEFORE entering. The biggest beginner mistake is having no exit plan, then getting whipsawed by emotion.

Related: Entry · Take Profit · Stop Loss

Stop Loss(SL · stop-loss · stoploss)

A stop loss is a pre-set price at which your position will automatically close to prevent further loss. Setting one BEFORE you enter a trade is non-negotiable for risk management. Common placements: below the previous swing low (long), above recent resistance (short), or 2× ATR away from entry.

Related: Take Profit · Risk-to-Reward Ratio · Position Sizing

Take Profit(TP · take-profit · profit target)

A take profit (TP) is a pre-set price where your trade closes in profit automatically. It removes the temptation to 'hold for more' and forces discipline. Good traders pair every entry with both a stop loss and a take profit — defines the trade's risk-to-reward before a single dollar moves.

Related: Stop Loss · Risk-to-Reward Ratio · Exit

Limit Order(limit · limit orders)

A limit order tells the exchange: 'Only fill me at $X or better.' It guarantees price but not execution — if the market never reaches your price, you don't get filled. Use limit orders when you want to control your entry/exit price exactly, or in low-liquidity markets to avoid slippage.

Related: Market Order · Slippage · Liquidity

Market Order(market · market orders)

A market order executes right now at whatever price the order book offers. It guarantees execution but not price — in thin markets you can pay way more than expected (slippage). Use it when getting filled matters more than the exact price, like exiting a trade fast.

Related: Limit Order · Slippage · Liquidity

Slippage(slipped)

Slippage is what it costs you to be impatient. You wanted to buy at $100, your market order fills at $100.30 — that's 30 cents of slippage. It happens when liquidity is thin or you're trading size. Limit orders eliminate slippage but risk non-execution.

Related: Liquidity · Market Order · Limit Order

Wallets, DeFi, layers, and the on-chain primitives unique to crypto markets.

DeFi(defi · decentralized finance)

DeFi (Decentralized Finance) is a stack of financial apps built on smart contracts. Instead of a bank, code holds your assets and runs the rules. You can lend, borrow, swap tokens, or earn yield with no signup, no KYC. Powerful but risky: smart contracts get hacked and rug pulls happen.

Related: Smart Contract · Stablecoin · Layer 1

Stablecoin(USDC · USDT · stablecoins)

Stablecoins are tokens designed to hold a fixed price — usually $1 USD. USDC and USDT are the biggest. They let you sit in 'cash' on-chain without converting back to fiat. Some are backed 1:1 by reserves (USDC), others are algorithmic (riskier — see Terra/UST collapse).

Related: Cryptocurrency · DeFi · Wallet

Smart Contract(smart contracts · contracts)

A smart contract is a program stored on a blockchain that runs automatically when triggered. It can hold funds, swap tokens, enforce rules, etc. — all without a human approving each step. Powers DeFi, NFTs, and most onchain apps. Bugs in smart contracts are permanent and can cost millions.

Related: DeFi · Layer 1 · Gas Fees

Layer 1(L1 · layer one)

Layer 1 (L1) refers to the base blockchains: Bitcoin, Ethereum, Solana, Avalanche, etc. They run their own consensus and security. L1s are where settlement happens. They're typically slower and more expensive than Layer 2 chains because every transaction is processed by the whole network.

Related: Layer 2 · Smart Contract · Gas Fees

Layer 2(L2 · layer two · rollup)

Layer 2 (L2) chains — Arbitrum, Optimism, Base, zkSync — process transactions off the main chain, then post compressed proofs back to L1. Result: fees 10–100× lower than mainnet, with most of L1's security. The future of crypto UX runs on L2s.

Related: Layer 1 · Gas Fees · Smart Contract

Gas Fees(gas · gas fee)

Gas is the fee paid to validators for processing your blockchain transaction. On Ethereum L1 it can be $5–$100+ depending on demand. On L2s it's usually pennies. Gas spikes during NFT mints, big DeFi events, or market volatility. Always check gas before clicking confirm.

Related: Layer 1 · Layer 2 · Smart Contract

Wallet(wallets · crypto wallet)

A crypto wallet holds your private keys — the secret data that proves you own your coins. Hot wallets (MetaMask, Phantom) live on your phone or browser; cold wallets (Ledger, Trezor) are offline hardware devices. Lose your keys, lose your crypto. Never share your seed phrase.

Related: Cryptocurrency · Smart Contract

Funding Rate(funding)

On perpetual futures (perps), the funding rate is a small fee exchanged between longs and shorts every 8 hours. When funding is positive, longs pay shorts (bullish bias). When negative, shorts pay longs (bearish bias). Extreme funding signals overcrowded positioning — often precedes reversals.

Related: Leverage · Short · Long

Calls, puts, strikes, expirations, and the Greeks that govern their pricing.

Call Option(call · calls)

A call option gives you the right to buy an asset at a fixed strike price before expiration. You pay a premium for that right. If the price rises above the strike, the call gains value. Calls are leveraged bullish bets — small premiums can pay off huge if the stock rallies.

Related: Put Option · Strike Price · Expiration

Put Option(put · puts)

A put option gives you the right to sell an asset at a fixed strike price before expiration. You profit when the underlying drops below the strike. Puts are how you bet against a stock without shorting it, or hedge an existing long position.

Related: Call Option · Strike Price · Expiration

Strike Price(strike)

The strike is the price baked into the option contract. A $200 call on Apple gives you the right to buy AAPL at $200 — regardless of where it's trading. Strikes 'in the money' are profitable now; strikes 'out of the money' need price to move first.

Related: Call Option · Put Option · Expiration

Implied Volatility(IV)

Implied Volatility (IV) is what option prices imply about future volatility. Earnings, FOMC, or major catalysts pump IV up; quiet periods crush it back down. Buying high-IV options means paying for expected movement — if the move doesn't happen, you lose to 'IV crush' even if direction was right.

Related: Volatility · Greeks · Expiration

Greeks(delta · gamma · theta)

The Greeks measure how an option's price responds to different inputs. Delta = price sensitivity to underlying move. Gamma = how delta changes. Theta = daily time decay (always negative for buyers). Vega = sensitivity to IV changes. Pros size positions by Greeks, not contract count.

Related: Implied Volatility · Call Option · Put Option

Expiration(expiry · expires)

Every option has an expiration date — weekly, monthly, or LEAPS (years out). At expiration, options are either exercised (if profitable) or expire worthless. Time decay (theta) accelerates as expiration approaches, especially in the final week. Short-dated options are high-risk, high-reward.

Related: Greeks · Strike Price · Implied Volatility

Reading a company's financials. The bedrock of long-term equity investing.

P/E Ratio(PE · PE ratio · price-to-earnings)

The P/E ratio compares a company's stock price to its earnings per share. A P/E of 20 means investors are paying $20 for every $1 of yearly earnings. High P/Es signal growth expectations; low P/Es can signal value or trouble. Always compare P/E within an industry — not across them.

Related: EPS · Stock · Revenue

EPS(earnings per share)

EPS = (net income − preferred dividends) / shares outstanding. It's the per-share slice of company profit. Growing EPS is one of the strongest tailwinds for a stock. Wall Street tracks EPS estimates obsessively — beats and misses move stocks dramatically on earnings day.

Related: P/E Ratio · Revenue · EBITDA

Revenue(sales · top line)

Revenue (or 'top line') is the gross dollars a company collected before costs. It tells you about scale and growth. A company with shrinking revenue is in trouble even if profits look fine. Pair revenue with margin trends: growing revenue with falling margins can be worse than flat revenue.

Related: EBITDA · Free Cash Flow · EPS

EBITDA(ebitda)

EBITDA strips accounting noise off net income to show operating cash generation. Useful when comparing companies with different debt loads or tax situations. Critics call it 'earnings before bad stuff' — interest and depreciation are real costs. Use EBITDA alongside Free Cash Flow, not as a replacement.

Related: Revenue · Free Cash Flow · EPS

Free Cash Flow(FCF · free-cash-flow)

Free Cash Flow (FCF) = operating cash flow − capital expenditures. It's the cash a company can return to shareholders, pay down debt, or reinvest. Hard to fake with accounting tricks. Many pros prefer FCF over net income as the truest measure of business quality.

Related: EBITDA · Revenue · EPS

Rates, inflation, the Fed — the global forces every market dances to.

Interest Rate(rates · interest rates)

Interest rates determine the cost of money. When the Fed raises rates, borrowing gets expensive, growth slows, and asset prices typically fall. When it cuts rates, money is cheap, asset prices usually rally. The Fed Funds Rate is the most-watched single number in finance.

Related: Federal Reserve · Inflation · Recession

Inflation(CPI · inflationary)

Inflation is the percentage increase in the general price level. The Fed targets 2% per year. Above-target inflation triggers rate hikes; below-target invites cuts. CPI and PCE are the main inflation reports — markets move sharply on each release.

Related: Interest Rate · Federal Reserve · Recession

Recession(recessions)

A recession is a significant slowdown in the economy: shrinking GDP, rising unemployment, falling production. The textbook trigger is two consecutive quarters of negative GDP, but the NBER uses broader criteria. Recessions historically coincide with bear markets, though stocks often bottom before the economy does.

Related: Bear Market · Interest Rate · Federal Reserve

Federal Reserve(the Fed · Fed · FOMC)

The Federal Reserve (the Fed) is the United States' central bank. It sets the Fed Funds Rate, manages the money supply, and acts as lender of last resort. The Federal Open Market Committee (FOMC) meets eight times a year — these meetings are top-tier market events globally.

Related: Interest Rate · Inflation · Recession