Terminology Tool

Clearly explaining complex terms to help lower the barrier to understanding

The glossary works best alongside the articles. When you encounter unfamiliar terms, metrics or order concepts, you can quickly look up definitions, understand usage context, and read the relevant notes.

Search Tool

Search and filter by category

You can search terms directly, or filter by Basics, Analysis Metrics, Order Types and Risk Management.

Basics

Dividend

Profit distributed by a company to shareholders based on earnings. Dividends are typically expressed as an amount per share; investors may receive cash payments or choose to reinvest.

Basics Updated: March 2026

Note: A high dividend yield does not equal high investment value. It must be evaluated alongside earnings stability, cash flow and industry conditions.

Stock

A stock is a certificate of ownership issued by a company. Holding stock means owning a portion of the company's equity; shareholders typically have voting rights and dividend rights.

Basics Updated: March 2026

Note: Stock prices are affected by multiple factors including company performance, market sentiment, industry trends and the macro environment. There is a risk of losing principal.

Bond

A bond is a debt instrument where the issuer borrows from investors, typically paying agreed interest and repaying principal at maturity.

Basics Updated: February 2026

Note: Bonds generally have lower volatility than stocks, but are still affected by interest rate changes, credit risk and market liquidity.

Exchange-Traded Fund (ETF)

An ETF is a fund listed and traded on an exchange, typically tracking a basket of assets or an index, providing investors with a more convenient diversification tool.

Basics Updated: March 2026

Note: ETFs vary in fees, liquidity, tracking error and holdings structure. Understand what it tracks and how it works before choosing one.

Mutual Fund

A mutual fund pools capital from multiple investors and is managed by a fund manager. Investors share returns and risks proportionally to their holdings.

Basics Updated: January 2026

Note: Mutual funds suit investors who prefer professional management, but attention should be paid to fee structures and redemption rules.

Capital Gain

The difference generated when an investment asset is sold at a price higher than its purchase price, typically classified as short-term or long-term capital gain.

Basics Updated: February 2026

Note: Capital gains may have tax implications; specific rules vary by jurisdiction and holding period.

Analysis Metrics

P/E Ratio (Price-to-Earnings)

The P/E ratio is the ratio of a stock's price to its earnings per share, used as an aid in assessing valuation levels.

Analysis Metrics Updated: March 2026

Common beginner misconception: A low P/E does not necessarily mean cheap, nor does a high P/E mean expensive. It must be analyzed together with growth, industry characteristics and earnings quality.

Return on Equity (ROE)

ROE measures the efficiency with which a company uses shareholders' equity to generate profit. It is an important reference metric for understanding earnings quality.

Analysis Metrics Updated: March 2026

Note: A high ROE may result from excellent operations or from high leverage, so it cannot be interpreted in isolation from the debt structure.

Earnings Per Share (EPS)

EPS represents how much profit a company generates for each share of stock. It is one of the fundamental metrics for measuring profitability.

Analysis Metrics Updated: February 2026

Note: EPS should be viewed together with valuation, growth, share count changes and profit quality. It cannot stand alone as an investment conclusion.

P/B Ratio (Price-to-Book)

The P/B ratio is the ratio of share price to net asset value per share, commonly used to observe valuations in asset-intensive industries or financial companies.

Analysis Metrics Updated: February 2026

Note: For asset-light, high brand premium or high-growth companies, the P/B ratio may have limited reference value.

Market Capitalization

Market cap is the total shares outstanding multiplied by the current share price, reflecting the capital market's overall valuation of a company's size.

Analysis Metrics Updated: January 2026

Note: Different market cap sizes typically correspond to different risk-return profiles. Large-cap, mid-cap and small-cap companies often differ in volatility and growth potential.

Order Types

Market Order

A market order executes as quickly as possible at the current available market price. It is fast to fill but offers weak price control.

Order Types Updated: March 2026

Note: In highly volatile or low-liquidity markets, the actual fill price may differ significantly from expectations.

Limit Order

A limit order specifies an acceptable buy or sell price and only executes when the market price meets that condition.

Order Types Updated: March 2026

Note: Limit orders give you price control, but at the cost of potentially not being filled — especially noticeable during rapid market moves.

Stop Order

When price reaches a preset stop level, the system triggers and converts the order to a market or limit order, used to limit losses or protect profits.

Order Types Updated: February 2026

Note: A stop order does not guarantee execution at the desired price; slippage can occur during sharp price moves.

Trailing Stop

A trailing stop adjusts the stop level as price moves in a favorable direction, allowing you to retain upside potential while attempting to lock in partial profits.

Order Types Updated: February 2026

Note: If the trailing percentage is set too tight, normal price fluctuations may trigger an unwanted exit.

Risk Management

Volatility

Volatility measures the magnitude and frequency of price changes. It is an important concept for understanding market risk and psychological pressure.

Risk Management Updated: March 2026

Note: High volatility implies both greater risk and greater short-term uncertainty. It should not be simplistically labeled as "good" or "bad".

Asset Allocation

Asset allocation is the process of distributing capital across different asset classes. It is a core component of risk management and long-term investment frameworks.

Risk Management Updated: March 2026

Note: There is no one-size-fits-all allocation; it must be understood in conjunction with time horizon, goals and risk tolerance.

Diversification

Spreading investments across different assets, industries or regions to reduce the impact any single judgment can have on the overall portfolio.

Risk Management Updated: March 2026

Note: Diversification helps reduce unsystematic risk but cannot eliminate systematic risk from broad market downturns.

Position Sizing

Position sizing is the process of determining what proportion of the overall portfolio a single investment should occupy, helping to control concentration risk.

Risk Management Updated: February 2026

Note: Bigger positions are not always better; excessive concentration amplifies losses from incorrect judgments.

Risk/Reward Ratio

The risk/reward ratio describes the relationship between potential loss and potential gain. It is one of the tools for understanding decision structure.

Risk Management Updated: January 2026

Note: The risk/reward ratio is only a supplementary framework and cannot replace comprehensive judgment on probability, liquidity and execution conditions.

Terminology Notice

The goal of term explanations is to aid understanding, not to substitute decision-making

The above term explanations are for educational reference only, to help readers build a basic conceptual framework. The terms themselves do not constitute investment advice, nor do they imply that any product, strategy or timing is suitable for you.