Settlement
Settlement is the final step of a trade, when ownership of the asset is transferred and payment is completed. The timing, method and responsible institutions depend on the market, instrument and venue, and the rules change over time.
Investment & trading encyclopedia
Understand investment products, market mechanics, indicators and research terminology. Each entry includes an explanation, example, cautions and related learning.
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Sharpe Ratio
The Sharpe ratio measures a portfolio's average return above the risk-free rate per unit of total volatility. It was introduced by William Sharpe to compare risk-adjusted performance across strategies.
Short Selling
Short selling is selling a security that the seller does not own, usually borrowed through a broker, with the aim of buying it back later at a lower price and returning it to the lender. The seller gains if the price falls and loses if it rises.
Slippage
Slippage is the difference between the price you expected for a trade and the price at which it actually executes. It arises from price movement and limited depth between the decision and the fill, and it can be adverse or, occasionally, favorable.
Sortino Ratio
The Sortino ratio is a variation of the Sharpe ratio that divides excess return by downside deviation, which counts only returns below a chosen minimum acceptable return (MAR). It penalizes harmful volatility rather than all volatility.
Spot Price
The spot price is the current price at which an asset can be bought or sold for prompt delivery. For commodities and currencies it is the benchmark that futures and forward prices are compared with.
Stablecoin
A stablecoin is a crypto token designed to hold a steady value against a reference such as the US dollar, usually through reserve assets or an algorithmic rule. It is not cash or a bank deposit, and its target value is not guaranteed.
Stock
A stock is a unit of ownership in a company, usually called a share, that gives its holder a residual claim on the company's profits and assets, ranking behind creditors. Listed stocks can be bought and sold on an exchange at a market-determined price.
Stop Order
A stop order is an instruction that stays inactive until the market reaches a chosen trigger price, after which it becomes a live order. A standard stop becomes a market order when triggered, so its fill price is not guaranteed.
Strike Price
The strike price, also called the exercise price, is the fixed price at which an option holder can buy (for a call) or sell (for a put) the underlying asset. It is set in the contract and does not change when the market price moves.
Support and Resistance
Support is a price zone where declines have repeatedly slowed or reversed, and resistance is a zone where advances have repeatedly stalled. Both are drawn from past turning points and describe where trading activity previously changed direction.
Survivorship Bias
Survivorship bias arises when a dataset or backtest includes only securities, funds or companies that still exist today and omits those that were delisted, merged, liquidated or closed. Because failures disappear from the sample, average results look better and risks look smaller than they were.