How markets work

• Adjusted closeA historical closing price restated to account for dividends and splits, so returns compare fairly over time.
• After-hours tradingTrading that happens outside an exchange’s regular session, in a much thinner market.
• Algorithmic tradingUsing computer programs to decide the timing, price and size of orders automatically.
• AuctionA short period where orders are collected and matched at a single price, rather than continuously.
• Average daily volumeThe typical number of shares traded per day, usually averaged over the last month or quarter.
• Best executionA broker’s regulatory duty to seek the most favourable overall terms reasonably available for your order.
• Bid-ask spreadThe gap between the highest price anyone will pay and the lowest price anyone will accept.
• Circuit breakerAn automatic pause in trading, triggered when prices move too far too fast.
• Closing priceThe official price a security finished the session at, usually set by the closing auction.
• Contract noteThe document a broker issues after a trade, recording exactly what was bought or sold and at what price.
• CustodianThe institution that physically safeguards the securities you own.
• Dark poolA private venue where large orders are matched without being displayed publicly beforehand.
• Flash crashA very sudden, very deep price fall that reverses almost as quickly.
• GapA jump between one session’s close and the next session’s open, with no trading in between.
• High-frequency tradingAutomated trading that competes on speed, holding positions for fractions of a second.
• LeverageUsing borrowed money to increase exposure beyond what your own capital would buy.
• MarginBorrowing from your broker to buy more than your cash allows, using your portfolio as collateral.
• Margin callA demand from your broker to add cash or sell holdings, because your account equity has fallen too low.
• Market hoursThe window in which an exchange’s main continuous trading session runs.
• Market impactThe extent to which your own order moves the price against you as it executes.
• Market makerA firm that continuously quotes both a buy and a sell price, so there is always someone to trade with.
• Nominee accountAn arrangement where your broker is the registered owner of your shares and you are the beneficial owner.
• Order bookThe live list of every outstanding buy and sell order, arranged by price.
• Payment for order flowA broker being paid by a trading firm for the right to execute its customers’ orders.
• Securities lendingLending out shares you own, for a fee, usually to someone who wants to sell them short.
• SettlementThe process of actually exchanging cash for securities after a trade is agreed.
• Short interestThe number of a company’s shares currently sold short, often shown as a percentage of the free float.
• Short sellingBorrowing a security, selling it, and hoping to buy it back cheaper before returning it.
• Short squeezeA sharp price rise caused by short sellers being forced to buy back at once.
• SlippageThe difference between the price you expected and the price you actually got.
• TWAPThe average price over a period, weighting every moment equally regardless of volume.
• VWAPThe average price a security traded at over a period, weighted by how much traded at each price.
• VolumeThe number of shares or contracts traded in a period — a measure of how much activity there was.

Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.