Stock Market Glossary

The discount rate at which the net present value of an investment becomes zero, indicating the profitability of an investment as an annual rate. A higher IRR means better investment efficiency. It is widely used in real estate investment and project evaluation as well.

A composite order combining an IFD order (a set of new and settlement orders) with an OCO order (simultaneous take-profit and stop-loss orders). When the initial order is executed, take-profit and stop-loss orders are automatically placed simultaneously. It is one of the most advanced order types.

A sequential order where a second order is automatically placed once the first order executes. For example, you can set "buy at 1,000 yen, then sell at 1,200 yen." It reduces order effort and enables planned trading.

When a company offers its shares on a stock exchange for the first time. IPO shares can be purchased at the offering price and are popular because they often rise on the first day of trading. However, price increases are not guaranteed.

Investment ratings given to individual stocks by securities company analysts. They are rated in levels such as "buy," "neutral," and "sell," with target prices also provided. The aggregate of multiple analysts' ratings is called the consensus.

A trading method where buying and selling are automatically executed by computer programs. It trades at high speed according to pre-set rules without being influenced by human emotions. It is widely used primarily by institutional investors.

An indicator calculated from the magnitude of price gains and losses, displayed in a range of 0-100. Generally, above 70 is considered overbought and below 30 is oversold. Often used to time contrarian trades.

An indicator showing how much profit a company generates relative to shareholders' equity. Calculated as ROE = Net Income / Shareholders' Equity x 100. Generally, 10% or above is considered efficient management.

An indicator showing how much profit a company generates relative to its total assets. Calculated as ROA = Net Income / Total Assets x 100. Used alongside ROE to evaluate management efficiency.

A display showing the prices and quantities of sell and buy orders for a stock. By reading the order book, you can see how many orders are concentrated at each price level. More liquid stocks tend to have a "thick" order book (many orders).

Collateral deposited with a brokerage when conducting margin trading. Approximately 30% or more of the transaction amount is required, and stocks can be used as a substitute for cash. A margin call occurs when the maintenance rate falls below a certain level.

A method of matching trades used at market opening and resumption. Accumulated sell and buy orders are matched to determine the price that produces the most executions. It is a different price determination mechanism from continuous trading.

A technical indicator developed in Japan, consisting of five lines: the conversion line, base line, leading span 1, leading span 2, and lagging span. The distinctive "cloud" area allows comprehensive assessment of market trends and support/resistance zones.

A private pension system where you contribute and manage your own funds. It offers tax benefits including full income deduction for contributions and tax-free investment gains. However, withdrawals are generally not allowed until age 60.

An indicator that shows how far the current stock price has deviated from its moving average as a percentage. A large positive deviation suggests overbought conditions, while a large negative deviation suggests oversold conditions. It is used as a reference for contrarian investing.

A line graph connecting average stock prices over a certain period. Used to understand trend direction. Analysis combines short-term (5-day, 25-day) and long-term (75-day, 200-day) moving averages.

Revenue earned simply by holding stocks. The most common example is dividends, where a portion of the company's profits is distributed to shareholders. It is an important source of returns in stock investing alongside capital gains.

A mutual fund that aims to replicate the performance of a market index such as the Nikkei 225 or TOPIX. With low management costs and broad market diversification, it is considered the standard approach for long-term investing.

A mutual fund listed on a stock exchange that can be traded in real-time like stocks. Many track indices such as the Nikkei 225 or S&P 500, and are popular products that enable low-cost diversified investing.

A profit metric adding interest, depreciation, and amortization to pre-tax income, used to compare companies' fundamental earning power. It eliminates the effects of differences in countries and accounting standards, making it suitable for global company comparisons.

Net income divided by the number of outstanding shares, showing how much profit is generated per share. Higher EPS indicates stronger earning power. It is a key metric that forms the basis for PER calculations.

An indicator calculated by dividing enterprise value (EV) by EBITDA (earnings before interest, taxes, depreciation, and amortization). It eliminates differences in accounting standards across countries and industries, making it widely used for global company comparisons. Generally, 8-10x is considered a benchmark.

The date when stocks and payment are actually exchanged after a trade is executed. In Japan, the settlement date is 2 business days after the execution date (T+2). This also relates to acquiring rights for dividends and shareholder benefits.

The total income a company earns from selling products or services. The simplest indicator of a company's size and growth, also called the "top line." Revenue growth rate is fundamental data for assessing a company's growth potential.

The thin lines extending above and below the body of a candlestick. A long upper shadow indicates selling pressure at higher prices, while a long lower shadow shows buying support at lower prices. The length of shadows represents the battle between buyers and sellers during that period.

Shows the actual cash flow generated from core business activities. Caution is needed when a company is profitable but cash is not increasing. Companies with stable positive operating cash flow are considered financially healthy.

Profit from core business activities, calculated by subtracting cost of goods sold and selling/administrative expenses from revenue. An important indicator of a company's core earning power. Companies with steadily growing operating income are attractive investments.

A trading method that places and withdraws massive numbers of orders at ultra-high speeds measured in milliseconds. It is the fastest form of algorithmic trading, profiting from tiny price differences. While it contributes to market liquidity, there are debates about fairness.

A stock index composed of 500 major American companies, considered the best representation of the overall U.S. stock market. Calculated using market-cap weighting, many index funds and ETFs track this index.

A special settlement price used for the final settlement of stock index futures and options. It is calculated on the second Friday of every month, and March, June, September, and December are called "Major SQ" when market volatility tends to increase.

A stock index composed of 30 representative American companies, officially called the "Dow Jones Industrial Average." It has a significant impact on global stock markets, and Japanese investors also watch it closely due to its high correlation with the Nikkei 225.

The UK's leading stock market index composed of the top 100 companies by market capitalization listed on the London Stock Exchange. It is one of Europe's major indices and includes many global companies. Trading takes place from the evening to night in Japan time.

A family of global stock market indices calculated by MSCI Inc. (formerly Morgan Stanley Capital International). It includes multiple indices such as MSCI World (developed markets) and MSCI Emerging Markets, used as benchmarks by institutional investors worldwide.

A band-shaped indicator that sets fixed percentage deviations above and below a moving average line. When the price approaches the upper band it suggests overbought conditions, and when near the lower band, oversold conditions. It can be used similarly to Bollinger Bands.

A demand for additional funds when unrealized losses in margin trading cause the margin maintenance rate to fall below the required level. If a margin call occurs and funds are not deposited by the deadline, positions are forcibly liquidated. It is one of the major risks of margin trading.

An order method where two orders are placed simultaneously, and when one executes, the other is automatically canceled. For example, placing both a limit order for profit-taking and a stop order for loss-cutting allows automatic order management.

Repeatedly buying and selling the same stock in a short period. There is a risk of accumulating trading fees and increasing costs. When brokerages encourage clients to trade frequently, it can be considered inappropriate sales practice.

An indicator showing how far the stock price has deviated from the moving average. The larger the deviation, the more "overextended" it is considered, and a move back toward the average (mean reversion) becomes more likely. Used as a reference for contrarian trading.

An indicator showing how many times the stock price is compared to earnings per share (EPS). Calculated as PER = Stock Price ÷ EPS. Lower PER suggests undervaluation, higher suggests overvaluation, but averages differ by industry.

An indicator showing how many times the stock price is compared to book value per share (BPS). Calculated as PBR = Stock Price ÷ BPS. When PBR falls below 1, theoretically it would be more profitable for shareholders to dissolve the company.

Securities issued by companies to raise capital. When you purchase stocks, you become one of the owners (shareholders) of that company. Shareholders have the right to receive dividends and exercise voting rights at shareholder meetings.

A measure that splits one share into multiple shares to lower the price per share and make investment more accessible. For example, in a 1:2 split, the price halves and the number of shares doubles. The company's actual value does not change.

The highest decision-making body of a corporation, held at least once a year, where shareholders can participate. It resolves important matters such as appointing directors, determining dividends, and amending articles of incorporation. Shareholders have voting rights proportional to their shares.

A system where companies provide shareholders with products, services, or discount coupons. Not all companies offer this program, and you need to hold shares on the record date. It is a uniquely Japanese system popular among individual investors.

A technique of borrowing and selling shares you don't own, expecting a price decline, then buying them back at a lower price to return and profit. A type of margin trading where you profit when prices fall, but lose when they rise.

The exchange ratio between different currencies. For Japanese stock investing, the USD/JPY rate is especially important; a weaker yen benefits exporters while a stronger yen benefits importers. It also affects investments in foreign stocks and foreign currency-denominated assets.

An indicator of total company value calculated by adding interest-bearing debt to market capitalization and subtracting cash. Calculated as EV = Market Cap + Interest-Bearing Debt - Cash. Also used as a guideline for acquisition prices in M&A transactions.

The profit earned from selling stocks at a higher price than the purchase price. For example, if you buy a stock at 1,000 yen and sell it at 1,500 yen, the capital gain is 500 yen. It is one of the primary sources of profit in stock investing.

The cost (interest rate) of borrowing money. The policy rate set by central banks significantly impacts the stock market. Generally, when interest rates rise, stock prices fall, and when rates fall, stock prices rise.

An order method that automatically triggers when a specified price is reached. Used for stop-loss and profit-taking. For example, setting "sell if the price drops to 900 yen or below" automatically limits your losses.

A reversal pattern appearing at market bottoms, the inverse of the head and shoulders pattern. It consists of three troughs with the central one being the deepest. A break above the neckline signals a shift to an uptrend and is a powerful buy signal.

Projected figures for revenue and profit that companies forecast for the next quarter or fiscal year. There are company-issued forecasts announced at earnings and analyst consensus estimates. The gap between actual results and forecasts can significantly move stock prices.

Profit calculated by adding non-operating income (such as interest received) to operating income and subtracting non-operating expenses (such as interest paid). It shows profit from the company's normal business activities, including financial operations beyond the core business.

A preliminary earnings report published by companies every quarter. It contains actual results and forecasts for revenue, operating income, and net income, significantly affecting stock prices. Stock prices can move sharply on earnings announcement dates.

The buy and sell prices displayed before a trade is executed. The lowest ask price (minimum selling price) and highest bid price (maximum buying price) are especially important, and the difference between them is called the spread.

An accounting treatment where the book value of an asset is written down to its market value when the asset's value has significantly declined. Recording large impairment losses is a sign of deteriorating performance and often negatively impacts the stock price.

Bonds issued by a government to raise funds. Japanese government bonds are called "JGBs." Bond interest rates (yields) are closely related to stock market movements, and rising long-term rates generally have a negative impact on stock prices.

A phenomenon where a short-term moving average crosses above a long-term moving average, considered a buy signal. It suggests the market may be shifting to an uptrend, but caution is needed as false signals can occur.

The outstanding balance of spot stock purchases associated with arbitrage trading (trading that exploits price differences between futures and spot). High arbitrage long balance increases future selling pressure and the risk of price declines from unwinding. It is watched as a supply-demand indicator.

A candlestick pattern analysis method attributed to Edo-period rice trader Munehisa Homma. It consists of five patterns: Three Mountains, Three Rivers, Three Gaps, Three Soldiers, and Three Methods. It is considered the origin of Japanese technical analysis.

An order method where you specify the price at which you want to trade. You specify your desired price, such as "buy at this price or lower" or "sell at this price or higher." The order won't execute if the desired price isn't reached.

A price level where a declining stock price is considered unlikely to fall further. It is represented by a line connecting lows where the price has bounced back multiple times. Breaking below the support line suggests further decline.

A pattern where price movements gradually narrow, forming a triangle on the chart. The upper and lower bounds converge until a significant breakout occurs in one direction. A trend tends to develop in the direction of the breakout.

The Japanese name for head and shoulders, a reversal pattern at market tops consisting of three peaks resembling Buddhist trinity statues. The central peak is the highest with lower peaks on each side. It is considered a powerful sell signal.

The regular trading period between the opening and closing. During this time, trades are executed individually following the principles of "price priority and time priority." This is when trading is most active.

A quarterly company data book published by Toyo Keizai, officially called "Kaisha Shikiho." It features performance data and original assessments by reporters for all listed companies, serving as a bible for Japanese individual investors.

A stock market index covering all stocks listed on the Shanghai Stock Exchange in China. It is an important indicator of the Chinese economy and has a significant impact on the entire Asian market. It is closely watched due to its high correlation with Japanese stocks.

An account opened at a brokerage firm to buy and sell financial products such as stocks and mutual funds. It needs to be opened separately from a bank account, and some online brokers allow same-day account opening.

A marketplace where securities such as stocks are bought and sold. In Japan, the Tokyo Stock Exchange (TSE) is the largest, with additional exchanges in Nagoya, Sapporo, and Fukuoka. Exchanges set trading rules and monitor fair trading.

An indicator measuring changes in the prices of goods and services purchased by consumers, representing a key measure of inflation. Rising CPI means inflation, falling means deflation, significantly influencing central bank monetary policy.

The outstanding balance of unsettled margin purchases (long balance) and sales (short balance). High long balance indicates future selling pressure, while high short balance suggests future buyback demand. It is an important indicator for assessing supply and demand balance.

A trading method where you borrow money or stocks from a brokerage to trade. You can trade up to about 3.3 times your own funds, allowing for larger profits, but also carrying the risk of larger losses. Not recommended for beginners.

An indicator showing the overall level of unrealized gains and losses among investors with margin long positions. The larger the negative value, the greater the unrealized losses and the higher the risk of margin calls. It is often used to assess market bottoming.

A stock index composed of 400 companies selected based on capital efficiency metrics such as ROE and operating profit. It aims to select companies that are attractive to investors and serves as an indicator evaluating corporate earning power.

The total value calculated by multiplying the stock price by the number of outstanding shares, representing the company's market valuation. Companies with large market cap are called "large-cap stocks" and smaller ones "small-cap stocks." It is an important indicator for comparing company sizes.

The ratio of shareholders' equity to total assets, indicating a company's financial soundness. A higher equity ratio means less dependence on borrowing and more stable management. Generally, 40% or above is considered healthy.

When a company repurchases its own shares from the market. As the number of outstanding shares decreases, the value per share increases, which is a positive factor for the stock price. It is a shareholder return measure alongside dividends, and its announcement is generally received as positive news.

A type of candlestick where the open and close prices are nearly identical, forming a cross shape. It indicates that buying and selling forces are balanced, and it often appears at trend reversal points.

The final profit after subtracting all expenses (including taxes) from all revenues. Also called "net profit" or "bottom line." It is the indicator of a company's ultimate earning power, used in calculating EPS and ROE.

When a company's shares become available for trading on a stock exchange. Once listed, general investors can freely buy and sell the company's shares. Listing requires meeting the exchange's strict screening criteria.

The total added value of goods and services produced within a country over a set period. The most fundamental economic indicator showing economic size and growth. Positive GDP growth means economic expansion, negative means recession.

A medium-term trading strategy where stocks are bought and sold over a period of several days to several weeks. It involves less frequent trading than day trading, aiming to profit by riding trend waves. It is a style that can be pursued alongside a regular job.

A trading method that accumulates small profits per trade through ultra-short-term trades lasting seconds to minutes. It involves more frequent trading on an even shorter time frame than day trading. It requires high concentration and quick decision-making, making it an advanced technique.

An oscillator indicator showing where the current price sits within the range of highs and lows over a set period. Composed of %K and %D lines, it is used to identify overbought and oversold conditions, similar to RSI.

The state where a stock's daily price movement reaches the upper or lower limit. When the price reaches the limit range from the previous day's close, trading beyond that price is restricted. This system protects investors from extreme price fluctuations.

The range within which a stock price can fluctuate in a single day. The range is set based on the previous day's closing price according to the stock price level. For example, for a stock priced at 1,000 yen, the limit range is +/- 150 yen.

A method of analyzing groups of companies in the same industry (sector). Since promising sectors change with economic cycles, it is used in sector rotation strategies. Average PER and growth rates by industry serve as useful references.

Performance data such as revenue and profit broken down by business division. It reveals which businesses are growing and which are underperforming. It is a particularly important source of information when analyzing diversified companies.

Trading hours on the stock exchange are divided into morning (zenba) and afternoon (goba) sessions. Morning is 9:00-11:30, afternoon is 12:30-15:30. No trading occurs during the lunch break. The afternoon session closing time was extended to 15:30 from November 2024.

Selling a stock when unrealized losses exceed a certain level to prevent further loss expansion. Considered one of the most important skills in investing, it is the basis of "cut losses short, let profits run."

When a company issues new shares to raise capital. While some capital increases are positive for business expansion, the increase in outstanding shares dilutes existing shareholders' holdings and is generally a negative factor for the stock price.

The minimum trading unit when buying and selling stocks. In Japan, one trading unit is generally 100 shares. For example, a stock priced at 1,000 yen requires a minimum of 100,000 yen (1,000 yen x 100 shares).

A chart pattern where the stock price rises to near the same high twice before declining. It appears at market tops and is considered a sell signal suggesting the end of an uptrend. A break below the neckline often accelerates the decline.

A chart pattern where the stock price falls to near the same low twice before rising. It appears at market bottoms and is considered a buy signal suggesting the end of a downtrend. A break above the neckline often accelerates the rise.

An investment style where stocks are held over a long period of several years or more. It aims for asset growth through company expansion and compound interest effects without being affected by short-term price movements. It is one of the most recommended investment methods for beginners.

A candlestick pattern where a large candle completely engulfs the previous candle. A bullish engulfing pattern is a strong buy signal, while a bearish engulfing pattern is a strong sell signal. It is the opposite pattern of the harami.

An investment method where you regularly purchase financial products in fixed amounts, such as monthly or weekly. It can be started with small amounts and benefits from dollar-cost averaging, making it particularly suitable for beginners. It is also utilized through the systematic investment quota in the new NISA.

The ratio of interest-bearing debt divided by shareholders' equity, indicating a company's financial leverage. Below 1x means equity exceeds debt, suggesting financial stability. The appropriate level varies by industry.

A short-term trading strategy where buying and selling are completed within the same day. Since it aims to profit from daily price movements, constant market monitoring is required. While there is potential for large profits, it is also a high-risk approach.

The quantity of shares traded within a certain period. Higher volume indicates greater attention to that stock. By analyzing volume together with price movements, you can assess the reliability of trends.

A phenomenon where a short-term moving average crosses below a long-term moving average, considered a sell signal. It suggests the market may be shifting to a downtrend, but like golden crosses, false signals can also occur.

A financial product where funds collected from many investors are managed by professional fund managers. It allows diversified investment from small amounts, making it easy for beginners to start. Management costs (trust fees) apply.

The market for emerging companies on the Tokyo Stock Exchange, listing companies with high growth potential. It transitioned from the former Mothers and JASDAQ Growth in the April 2022 restructuring. A characteristic feature is that many stocks have large price movements.

The mid-tier market of the Tokyo Stock Exchange for companies with a certain level of market capitalization and liquidity. It transitioned from the former TSE Second Section and parts of JASDAQ in the April 2022 restructuring. Many mid-sized companies familiar to individual investors are listed here.

The top-tier market of the Tokyo Stock Exchange, designed for large companies that emphasize constructive dialogue with global investors. It transitioned from the former TSE First Section in the April 2022 market restructuring. It has the strictest listing standards.

An index showing the performance of all REITs (Real Estate Investment Trusts) listed on the Tokyo Stock Exchange. It reflects changes in the real estate market and interest rate environment, serving as a benchmark for REIT investment decisions. It sometimes moves differently from the stock market.

An indicator calculated by dividing the number of advancing stocks by declining stocks and multiplying by 100, used to assess overall market overheating or cooling. Above 120% is considered overbought, below 70% oversold. It is popular as a reference indicator for contrarian investing.

A type of account where the brokerage calculates your annual trading gains and losses. Choosing "with tax withholding" eliminates the need for tax filing, making it recommended for beginners. Most investors use this type of account.

A stock index covering stocks listed on the Tokyo Stock Exchange that meet certain criteria. Unlike the Nikkei 225, it is weighted by market capitalization, making it considered a more accurate reflection of overall market movements.

A straight line connecting lows or highs on a chart. In an uptrend, lows are connected; in a downtrend, highs are connected. When prices break through the trend line, it is considered a sign of trend reversal.

An order method that automatically raises the stop-loss level as the stock price rises. It allows you to extend profits while automatically settling when the price drops by a certain amount, achieving both profit protection and loss limitation simultaneously.

The exchange rate between the U.S. dollar and Japanese yen, the most influential forex indicator for the Japanese stock market. Displayed as "1 USD = 150 JPY," where a larger number means a weaker yen and a smaller number means a stronger yen.

A strategy of regularly investing a fixed amount to average out the purchase price. You buy fewer shares when prices are high and more when prices are low, reducing the risk of buying at peaks. It is a fundamental strategy for systematic investing.

An American electronic stock market where many technology companies are listed. World-renowned IT companies such as Apple, Google, and Amazon are listed here. The NASDAQ Composite Index is an important indicator of high-tech stock trends.

An order method without specifying a price. The trade executes immediately at the current market price. Used when you want to ensure execution, but during rapid price movements, it may execute at an unexpected price.

A technique of buying more shares when the price drops to lower the average cost per share. If the price recovers, it becomes easier to profit, but if it continues to fall, losses can expand. Beginners should use this technique with caution.

A quarterly business sentiment survey by the Bank of Japan, officially called the "Short-term Economic Survey of Enterprises in Japan." The Diffusion Index (DI) for large manufacturers is especially watched, influencing stock markets as a leading economic indicator.

An index that predicts the magnitude of stock price fluctuations over the next month, calculated from Nikkei 225 option prices. Also called the "fear index," higher values indicate greater market instability. It normally fluctuates in the range of 20 to 30.

A representative Japanese stock index calculated from the stock prices of 225 companies listed on the Tokyo Stock Exchange Prime Market. It is an important indicator of Japanese economic trends and is frequently featured in the news.

A tax-advantaged system for individual investors where profits from investments within a NISA account are tax-free. From 2024, the new NISA offers two frameworks: a savings investment quota and a growth investment quota. It is the first system beginners should take advantage of.

The amount by which the acquisition price exceeds the net assets of the acquired company during M&A. It reflects intangible values such as brand power and technological capabilities. Investors pay close attention as goodwill impairment can lead to significant losses.

Money distributed to shareholders from a portion of the company's profits. Not all companies pay dividends; growth companies often reinvest profits. Dividend amounts are shown per share.

The ratio showing how much of net income is returned to shareholders as dividends. Calculated as Payout Ratio = Total Dividends / Net Income x 100. If too high, less funds may be available for future growth investments.

The ratio of annual dividends per share divided by the stock price. Calculated as Dividend Yield = Annual Dividend / Stock Price x 100. Useful for comparison with bank deposit interest rates, and an important indicator for high-dividend stock investing.

A model that calculates the theoretical stock price by discounting future dividends to present value. It is suitable for valuing mature companies with stable dividends. The key to analysis lies in setting the dividend growth rate and discount rate.

A candlestick pattern where a small candle fits within the body of the preceding candle. It indicates market indecision and signals a potential trend reversal or pause. Appearing during an uptrend suggests a top, while during a downtrend it may signal a bottom.

A technical indicator that shows trend reversal points, displayed as parabolic dots on the chart. When dots are below the price it indicates an uptrend, and when above, a downtrend. It is a trend-following indicator.

The point when trading ends on the stock exchange. There is a morning close (11:30) and the final close (15:30). The price at the final close becomes the "closing price," and stock prices reported in the news usually refer to this closing price.

An index showing expected market volatility calculated from S&P 500 option prices. It normally ranges around 15-25, but spikes when market anxiety increases. Above 30 is considered "fear" level, and above 40 is "panic" level.

Net assets (assets minus liabilities) divided by the number of outstanding shares. It shows the theoretical amount distributed per share if the company were dissolved. It forms the basis for PBR calculations.

An indicator dividing market capitalization by annual revenue, showing how many times the stock price is valued relative to sales. Used to evaluate growth companies that are not yet profitable, serving as an alternative when PER cannot be used.

An indicator calculated by dividing the stock price by cash flow per share. Similar to PER but evaluates based on actual cash flow rather than accounting profits, providing a more realistic company valuation. It is also suitable for international comparisons.

A proprietary trading system that allows stock trading without going through a stock exchange. Since night trading is available, it is convenient for investors who cannot trade during the day. It enables immediate response to overseas market movements outside exchange operating hours.

A method using ratios based on the Fibonacci sequence (23.6%, 38.2%, 61.8%, etc.) along with the 50% half-retracement level to predict pullback and rebound targets. Because many traders watch these levels, they often actually function as support and resistance lines.

The difference between the current market price and the purchase price of stocks you hold. If the market price is higher than the purchase price it is called an unrealized gain, and if lower, an unrealized loss. It is not a confirmed profit or loss until you actually sell.

The effect where reinvesting investment returns generates further returns, causing assets to grow like a snowball. It is most powerful in long-term investing, and Einstein reportedly called it "the greatest invention of mankind."

The funds a company can freely use after subtracting investment cash flow (such as capital expenditure) from operating cash flow. Used for dividend payments and debt repayment. Companies with consistently large free cash flow have capacity for shareholder returns.

The volume-weighted average price that shows the average cost of transactions for the day. It is often used by institutional investors as a benchmark, and buying below VWAP is considered a favorable trade.

An investment strategy that reduces risk by spreading investments across multiple stocks and asset classes. Following the famous saying "don't put all your eggs in one basket," if one stock falls, others can compensate.

A classic chart reversal pattern that appears at market tops. It consists of three peaks forming a left shoulder, head, and right shoulder. A break below the neckline is considered a signal of a shift to a downtrend. It is also called "sanzon tenjo" in Japanese.

An indicator dividing PER by earnings growth rate, allowing valuation assessment that accounts for growth. Calculated as PEG Ratio = PER / Earnings Growth Rate. Below 1 is considered undervalued, above 2 overvalued. Particularly useful for evaluating growth stocks.

A technical indicator that draws bands based on standard deviations above and below a moving average. About 95% of prices are expected to stay within the bands, and prices moving outside suggest an abnormal value and potential reversal.

The combination of financial assets you hold, such as stocks, bonds, and mutual funds. It is constructed considering the balance of risk and return. The optimal portfolio varies depending on age and investment goals.

A technical indicator that uses the difference between two exponential moving averages. Buy and sell timing is determined by the crossover of the MACD line and signal line. A popular indicator that simultaneously shows trend direction and strength.

A price gap between the previous day's close and the current day's open. Gaps can open upward on good news or downward on bad news. There is a market saying that "gaps get filled," meaning prices often return to close the gap eventually.

When a stock buy or sell order is completed. Execution occurs when the buyer's and seller's conditions match. Market orders execute almost immediately, while limit orders won't execute until the desired price is reached.

A general term for securities that have financial value, including stocks, bonds, and mutual funds. Those that can be traded on stock exchanges are called "listed securities." It is a fundamental concept in investing.

A detailed disclosure document that listed companies are required to submit annually. It includes financial statements, business descriptions, risk information, and executive compensation. Anyone can view them for free on EDINET.

A general term for borrowings and bonds that require interest payments. Companies with large interest-bearing debt face increased burden when interest rates rise, elevating business risk. Financial health is assessed by the ratio of interest-bearing debt to equity (D/E ratio).

Types of candlesticks where a bullish candle (yousen) has a close higher than the open, and a bearish candle (insen) has a close lower than the open. Bullish candles are typically shown in red or white, bearish in blue or black. Consecutive bullish candles indicate a strong uptrend.

The point when trading begins on the stock exchange. The morning session opens at 9:00 and the afternoon session at 12:30. Trades at the opening are determined by the "itayose" (call auction) method, and the first price becomes the "opening price."

Selling a stock with unrealized gains to lock in profits. The timing of profit-taking is one of the most difficult investment decisions. The market saying "leave the head and tail for others" means not to aim for perfect timing.

Methods for understanding and minimizing the possibility of investment losses. Representative techniques include diversification, setting stop-loss rules, and managing investment amounts. It is one of the most important skills in investing.

A price level where a rising stock price is considered unlikely to rise further. It is represented by a line connecting highs where the price has been rejected multiple times. Breaking above the resistance line suggests further upside.

Trading with an amount exceeding your own capital, a term derived from the principle of a lever. Margin trading allows about 3x leverage, while forex offers even higher ratios. Since both profits and losses are amplified, risk management is extremely important.

Financial statements that consolidate the parent company with its subsidiaries and affiliates as a whole corporate group. They reveal the overall picture that cannot be seen from individual company statements. It is important to check consolidated figures when making investment decisions.

A chart that represents four prices (open, high, low, close) in a candle-like shape. Includes bullish (rising) and bearish (falling) candles, used to read market momentum and turning points.