Journey Shares Wiki

Trading and economics glossary

Plain-English definitions of the trading, investing and economics terms you'll meet in markets and in college courses, each with a formula and a worked example where there is one, and how it works in the Journey Shares stock market game.

Guides

How to learn to trade stocks without risking money
The safest way to learn to trade is to learn a handful of core ideas (how prices are set, order types, risk and fees), then practise with play money in a stock market simulator until your results are consistent.
Free stock market simulator: what to look for
A stock market simulator lets you buy and sell with virtual money under market-like rules, so you can learn investing without financial risk.
Real-time trading explained
Real-time trading means buying and selling on live prices that update the moment trades happen, instead of quotes delayed by 15 to 20 minutes.
Paper trading vs real trading
Paper trading uses play money, so it teaches the mechanics of trading (orders, fees, risk rules, strategy testing) without any financial risk.
Streamer stocks: trading Destiny, Hasan Piker and other commentators
On Journey Shares you can trade play-money shares in streamers and political commentators, including Destiny ($TINY) and Hasan Piker ($HSN).
Economics glossary for college students
This glossary defines the economics and finance terms that come up most in college intro courses, from supply and demand and elasticity to GDP, inflation, monetary policy, CAPM and Black-Scholes.
How stock prices are set
A stock's price is the price at which the last buyer and seller agreed to trade.
Teaching economics with a stock market game
A stock market simulator turns textbook economics into something a class can watch happen.

Trading basics

What stocks, shares and markets are, and how trading works.

Bear market: A bear market is a long period of falling prices, usually a drop of 20% or more from a recent high.
Broker: A broker is a licensed firm that places trades on an exchange for you and holds your investments in an account, like Fidelity, Schwab or Robinhood.
Bull market: A bull market is a long period of rising prices, often defined as a 20% rise from a recent low.
Capital gain: A capital gain is the profit from selling an investment for more than you paid for it; selling for less is a capital loss.
Commission: A commission is a fee a broker charges for placing a trade.
Cost basis: Cost basis is what you paid for an investment, including fees, used to work out your gain or loss when you sell.
Dividend: A dividend is a cash payment a company makes to its shareholders out of its profits, usually every quarter.
IPO (initial public offering): An IPO is the first time a company sells shares to the public, after which its stock trades on an exchange.
Market capitalization: Market capitalization is the total value of a company's shares: the share price multiplied by the number of shares outstanding.
Net worth: Net worth is everything you own minus everything you owe.
P/E ratio (price-to-earnings): The price-to-earnings ratio is a stock's price divided by its earnings per share, showing how much investors pay for each dollar of profit.
Portfolio: A portfolio is the full set of investments a person or fund owns, such as stocks, funds, bonds and cash.
Share: A share is a single unit of a company's stock.
Shares outstanding: Shares outstanding are all the shares of a company currently held by investors.
Stock: A stock is a unit of ownership in a company.
Stock exchange: A stock exchange is a regulated marketplace where buyers and sellers trade shares, such as the New York Stock Exchange (NYSE) or Nasdaq.
Ticker symbol: A ticker symbol is the short code of letters used to identify a stock on an exchange, like AAPL for Apple or TSLA for Tesla.
Underwriter: An underwriter is the investment bank that manages a new stock or bond issue, pricing it and selling it to investors in return for a fee.

Orders and prices

How a price is set and how an order gets filled.

Automated market maker (AMM): An automated market maker is a pricing formula that always quotes a price to buy or sell, instead of matching buyers with sellers in an order book.
Bid-ask spread: The bid is the highest price a buyer will pay right now, the ask is the lowest price a seller will accept, and the spread is the gap between them.
Bonding curve: A bonding curve is a formula that sets an asset's price from how many units are in circulation, so each purchase raises the price and each sale lowers it.
Limit order: A limit order buys or sells only at a set price or better, so you control the price but it may never fill.
Liquidity: Liquidity is how easily something can be bought or sold quickly without moving its price much.
Market order: A market order buys or sells straight away at the best price available, trading certainty of filling for certainty of price.
Order book: An order book is the live list of buy and sell orders waiting at each price for a stock.
Real-time quote: A real-time quote is a stock's current price as trades happen, as opposed to a delayed quote that lags by 15 to 20 minutes.
Slippage: Slippage is the difference between the price you expected and the price you actually got on a trade.
Stop-loss order: A stop-loss order sells automatically once a stock falls to a set price, to cap how much you can lose.
Volatility: Volatility measures how much and how quickly a price moves up and down, usually as the annualized standard deviation of its returns.

Risk and strategy

Leverage, short selling, diversification and managing risk.

Beta: Beta measures how much a stock tends to move compared with the whole market: a beta of 1 moves with the market, above 1 moves more, below 1 moves less.
Day trading: Day trading is buying and selling within the same day to profit from short price moves, closing every position before the market closes.
Diversification: Diversification is spreading money across many different investments so a loss on one has less effect on the whole portfolio.
Leverage: Leverage is using borrowed money to increase the size of an investment, which magnifies both gains and losses.
Margin: Buying on margin means borrowing money from your broker to buy more stock than your cash alone allows, using your investments as collateral.
Margin call: A margin call is a demand from your broker to add cash or sell investments because your own stake in a margin account has fallen below the required minimum.
Paper trading: Paper trading is practising trades with pretend money, so you can learn how markets work and test strategies without risking real savings.
Position sizing: Position sizing is deciding how much money to put into a single trade, usually based on how much you're willing to lose if it goes wrong.
Risk management: Risk management in trading is limiting how much you can lose, through position sizing, stop-losses, diversification and avoiding too much leverage.
Risk tolerance: Risk tolerance is how much loss or price swing an investor can accept, financially and emotionally, in pursuit of higher returns.
Short selling: Short selling is borrowing shares, selling them, and buying them back later, to profit if the price falls.
Short squeeze: A short squeeze is a sharp price rise that forces short sellers to buy shares back to limit their losses, which pushes the price even higher.
Standard deviation: Standard deviation measures how spread out a set of numbers is around its average.
Stock market simulator: A stock market simulator is a game or tool that lets you buy and sell with virtual money under market-like rules, to learn investing without financial risk.

Options

Calls, puts, strikes, expiry and how options are priced.

Black-Scholes model: The Black-Scholes model is a formula for the fair price of a European option using five inputs: the stock price, strike, time to expiry, risk-free interest rate and volatility.
Call option: A call option is a contract that gives its buyer the right, but not the obligation, to buy a stock at a set price (the strike) before or at a set date.
Expiration date: An option's expiration date is the last day it can be used.
Implied volatility: Implied volatility is the size of future price swings that an option's market price implies.
In the money: An option is in the money when exercising it now would pay something: a call whose strike is below the stock price, or a put whose strike is above it.
Option premium: An option's premium is the price paid to buy it.
Out of the money: An option is out of the money when exercising it now would pay nothing: a call with a strike above the stock price, or a put with a strike below it.
Put option: A put option is a contract that gives its buyer the right to sell a stock at a set price (the strike) before or at a set date.
Strike price: The strike price is the fixed price at which an option lets its holder buy (for a call) or sell (for a put) the underlying stock.

Funds and investing

ETFs, index funds, compounding and long-term investing.

Asset allocation: Asset allocation is how you divide a portfolio among types of investment, such as stocks, bonds and cash, based on your goals and tolerance for risk.
Bond: A bond is a loan to a government or company that pays the lender interest (the coupon) and returns the full amount (the face value) at a set date.
Capital asset pricing model (CAPM): The capital asset pricing model says an investment's expected return equals the risk-free rate plus its beta times the market's extra return over that rate.
Compound interest: Compound interest is interest earned on both your original money and the interest it has already earned, so savings grow faster over time.
Dollar-cost averaging: Dollar-cost averaging means investing the same amount at regular intervals, whatever the price, so you buy more shares when prices are low and fewer when they're high.
ETF (exchange-traded fund): An ETF is a fund that holds a basket of investments, such as all the stocks in an index, and trades on an exchange like a single stock.
Expense ratio: The expense ratio is the yearly fee a fund charges, as a percentage of the money you have in it.
Index fund: An index fund is a fund that buys every stock in a market index, such as the S&P 500, in the same proportions, so it matches the market's return instead of trying to beat it.
Market index: A market index is a number that tracks the combined price of a set group of stocks, such as the S&P 500 (500 large US companies), to show how that part of the market is doing.
Mutual fund: A mutual fund pools money from many investors to buy a portfolio chosen by a manager.
Yield: Yield is the income an investment pays each year as a percentage of its price, such as a bond's interest or a stock's dividends.

Banking and credit

How banks, interest, reserves, capital and bailouts work.

Bailout: A bailout is when a government or central bank gives money to a failing company or bank to keep it from collapsing, usually because its failure would hurt the wider economy.
Bank run: A bank run happens when many depositors withdraw their money at once because they fear the bank will fail, which can make it fail even if it was sound.
Capital requirements: Capital requirements are rules that make banks fund part of their lending with their own money (equity) so they can absorb losses without failing.
Collateral: Collateral is an asset a borrower pledges to a lender, which the lender can take or sell if the loan isn't repaid.
Credit score: A credit score is a number, usually from 300 to 850 in the US, that estimates how likely a person is to repay debts.
Fractional reserve banking: Fractional reserve banking is the system in which banks keep only part of their deposits as cash reserves and lend out the rest, which creates new money in the economy.
Interest rate: An interest rate is the price of borrowing money, stated as a percentage of the loan per year.
Moral hazard: Moral hazard is the tendency to take more risk when someone else bears the cost if things go wrong, such as a bank expecting a bailout or a driver who is fully insured.
Risk-free rate: The risk-free rate is the return on an investment with no default risk, usually taken as the yield on short-term US Treasury bills.

Taxes

Capital gains, income tax, the wash sale rule and deductions.

Capital gains tax: Capital gains tax is tax on the profit from selling an investment for more than you paid.
Standard deduction: The standard deduction is a fixed amount of income that isn't taxed at all.
Tax bracket: A tax bracket is a range of income taxed at one rate.
Wash sale rule: The wash sale rule stops you from claiming a tax loss if you buy the same or a substantially identical investment within 30 days before or after selling it at a loss.

Microeconomics

Supply, demand, elasticity, costs and choices: the core of Econ 101.

Comparative advantage: Comparative advantage is the ability to produce something at a lower opportunity cost than someone else.
Consumer surplus: Consumer surplus is the difference between what buyers would be willing to pay and what they actually pay.
Deadweight loss: Deadweight loss is the value lost to society when a market produces less (or more) than the efficient quantity, often because of a tax, price control or monopoly.
Diminishing returns: Diminishing returns means that adding more of one input, while others stay fixed, eventually adds less and less output.
Economies of scale: Economies of scale are the cost savings a business gets as it grows: the average cost of each unit falls as it produces more.
Marginal cost: Marginal cost is the cost of producing one more unit.
Marginal utility: Marginal utility is the extra satisfaction from one more unit of something.
Market equilibrium: Market equilibrium is the price at which the quantity buyers want equals the quantity sellers offer, so there's no shortage or surplus.
Opportunity cost: Opportunity cost is the value of the best alternative you give up when you make a choice.
Price ceiling: A price ceiling is a legal maximum price, like rent control; a price floor is a legal minimum, like a minimum wage.
Price elasticity of demand: Price elasticity of demand measures how much the quantity people buy changes when the price changes.
Sunk cost: A sunk cost is money or effort already spent that can't be recovered.
Supply and demand: Supply and demand is the model that explains prices: when more people want something than is available, its price rises; when more is available than people want, its price falls.

Macroeconomics

Inflation, GDP, interest rates, the Fed and the whole economy.

CPI (consumer price index): The consumer price index tracks the price of a fixed basket of goods and services that households buy.
Deflation: Deflation is a sustained fall in the general price level.
Federal funds rate: The federal funds rate is the interest rate at which US banks lend reserves to each other overnight.
Fiscal policy: Fiscal policy is the government's use of spending and taxes to influence the economy.
GDP (gross domestic product): GDP is the total market value of all final goods and services produced in a country in a period.
Inflation: Inflation is the rate at which prices across the economy rise over time, so each dollar buys less.
Market cycle: The market cycle is the repeating pattern of expansion, peak, contraction and recovery in prices and in the wider economy.
Monetary policy: Monetary policy is how a central bank manages interest rates and the money supply to keep inflation low and employment high.
Money supply: The money supply is the total amount of money in an economy.
Quantitative easing: Quantitative easing is when a central bank creates money to buy large amounts of bonds, pushing long-term interest rates down to support the economy when short-term rates are already near zero.
Recession: A recession is a significant, widespread fall in economic activity that lasts more than a few months.
Stagflation: Stagflation is high inflation combined with slow growth and high unemployment.
Unemployment rate: The unemployment rate is the share of people in the labour force who don't have a job but are looking for one.

Market structure

Competition, monopoly, market failure and game theory.

Efficient market hypothesis: The efficient market hypothesis says stock prices already reflect all available information, so no one can consistently beat the market except by luck or by taking more risk.
Externality: An externality is a cost or benefit that falls on people outside a transaction.
Game theory: Game theory is the study of strategic decisions, where each player's best choice depends on what the others do.
Information asymmetry: Information asymmetry is when one side of a deal knows more than the other.
Market bubble: A market bubble is when prices rise far above any reasonable measure of value because buyers expect to sell to someone else at a higher price, until confidence breaks and prices crash.
Market failure: Market failure is when a free market, left alone, doesn't produce the efficient outcome.
Monopoly: A monopoly is a market with a single seller and no close substitutes, which lets it set a higher price and sell less than a competitive market would, creating deadweight loss.
Nash equilibrium: A Nash equilibrium is a set of strategies in which no player can do better by changing their own strategy while the others keep theirs.
Oligopoly: An oligopoly is a market dominated by a few large firms, each of which must consider how the others will react.
Perfect competition: Perfect competition is a market with many sellers of an identical product, free entry and exit, and full information, so no one firm can set the price.
Public good: A public good is non-excludable (you can't stop people using it) and non-rival (one person's use doesn't reduce another's), like national defence or a lighthouse.

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Journey Shares

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