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Definition of Bear Trap A bear trap is a false technical signal that tricks traders into thinking a market or stock is heading downward (bearish), only for it to quickly reverse upward (bullish). It often happens when prices break below a support level, making it look like a downtrend is starting, but then the market rebounds—“trapping” those who sold short or exited too early. In simple terms: a bear trap is when the market fakes you out on the downside.

Definition of Market Correction A market correction is when a stock market index (like the S&P 500 or Dow Jones) drops by 10% or more from its recent high but less than 20%. If the decline goes beyond 20%, that’s considered a bear market. Corrections are a normal part of the market cycle and usually don’t last very long—historically, they often resolve in a few months.

Definition of Volatility Index (VIX) The VIX is calculated by the Chicago Board Options Exchange (CBOE). It’s derived from the prices of S&P 500 index options. Higher option prices often mean investors are bracing for bigger swings in the market, which pushes the VIX higher.

Definition of MSCI MSCI stands for Morgan Stanley Capital International, a company that provides some of the most widely used investment indexes and analytics in the world. Think of MSCI as the “scorekeeper” for global stock markets. When you hear about funds that track the MSCI World Index or the MSCI Emerging Markets Index, what they’re really doing is following the performance of groups of stocks MSCI has bundled together.

Definition of Shanghai Composite Index The Shanghai Composite Index (often called the Shanghai Composite) is the main stock market index that tracks all the stocks listed on the Shanghai Stock Exchange (SSE) in China. Think of it as China’s version of the S&P 500 or Dow Jones in the U.S.—a barometer for how Chinese companies are doing and how investors feel about the Chinese economy.

Definition of the Hang Seng Index The Hang Seng Index (HSI) is the main stock market index for Hong Kong. Think of it as Hong Kong’s version of the Dow Jones or S&P 500. It tracks the performance of the largest and most influential companies listed on the Hong Kong Stock Exchange, including banks, real estate developers, and tech giants.

Definition of Nikkei 225 The Nikkei 225 is a price-weighted stock market index made up of 225 blue-chip companies across multiple industries in Japan. “Price-weighted” means companies with higher stock prices carry more influence on the index, regardless of their total market size. It’s published by the Nihon Keizai Shimbun (that’s where “Nikkei” comes from—Japan’s leading financial newspaper). First introduced in 1950, it’s considered the leading indicator of Japan’s overa

Definition of DAX The DAX, short for Deutscher Aktienindex (German Stock Index), is Germany’s version of the S&P 500 or Dow Jones. It tracks the 40 largest and most liquid companies listed on the Frankfurt Stock Exchange. Think of it as a snapshot of Germany’s corporate heavy-hitters—big names like Siemens, Adidas, BMW, Volkswagen, and Deutsche Bank often appear in this list.

Definition of FTSE 100 When you hear people in the financial world talk about “the FTSE,” they’re usually referring to the FTSE 100 Index(pronounced “Footsie 100”). It’s the stock market index of the 100 largest companies listed on the London Stock Exchange (LSE) by market capitalization.

Definition of Russell 2000 Index The Russell 2000 is a stock market index that tracks the performance of about 2,000 smaller publicly traded companies in the U.S. It’s considered the best measure of how small-cap stocks (companies with relatively small market values) are doing. While the S&P 500 gets all the headlines for tracking America’s biggest corporations, the Russell 2000 gives you a peek into the health of the smaller players that make up the backbone of the U.S. eco

Definition of Nasdaq The Nasdaq (short for the National Association of Securities Dealers Automated Quotations) is both a stock exchange and a stock market index. It’s known for being the world’s first electronic exchange, launched in 1971, and is home to many of the largest technology and growth companies, including Apple, Microsoft, Amazon, and Tesla.

Definition of S&P 500 The S&P 500 (short for Standard & Poor’s 500) is one of the most well-known stock market indexes in the world. It tracks the performance of 500 of the largest publicly traded companies in the United States, covering industries like technology, healthcare, finance, energy, and consumer goods.

Definition of Dow Jones The Dow Jones Industrial Average (DJIA)—often just called “the Dow”—is one of the most widely recognized stock market indexes in the world. It tracks the performance of 30 large, publicly owned companies based in the United States. These companies span multiple industries, making the Dow a quick snapshot of how the stock market—and in many ways, the economy itself—is doing.

Definition of an Index An Index is a measurement tool that tracks the performance of a group of assets—usually stocks or bonds—so investors can see how a particular market or segment of the market is doing. Think of it as a financial scoreboard. The most famous indexes include the S&P 500, which follows 500 of the largest U.S. companies, and the Dow Jones Industrial Average, which tracks 30 major corporations.

Definition of Market Sentiment Market sentiment is the overall mood of investors about the market (or a specific stock, sector, or asset). Are people feeling optimistic (bullish), pessimistic (bearish), or just…meh (neutral)? That collective mood often shows up in prices, trading volume, and volatility.

Definition of Market Depth Market depth shows how much real buying and selling interest exists at different prices for a stock, ETF, or crypto. It’s the stack of limit orders waiting in line—how many shares are bid below the current price and how many are offered above it. Deeper markets = more shares at many price levels = easier to trade without moving the price.

Definition of Volume Volume is the number of shares (or contracts) traded in a security during a set time period (minute, day, week, etc.). It tells you how busy the market was for that ticker. More trades = higher volume.

Definition of Bid-Ask Spread (Plain English) The bid-ask spread is the tiny gap between what buyers are willing to pay (the bid) and what sellers are asking to receive (the ask) for a stock, ETF, crypto, or any traded asset. That gap is a built-in cost of doing business—like a small toll to cross the bridge between “I want it” and “I own it.”

Definition of Market Maker A market maker is a firm (or algorithm) that constantly offers to buy and sell a stock, ETF, or option—posting two prices (a bid and an ask)—so there’s always someone on the other side of your trade. They earn a small profit from the spread between those two prices and keep the market moving.

Definition of High-Frequency Trading High-Frequency Trading (HFT) is algorithm-driven, ultra-fast trading that uses powerful computers and direct exchange connections to place thousands of orders in milliseconds. Think “race cars on Wall Street”—built for speed, tuned for tiny price edges.