wikiHow Glossary of Trading Terms * Stock: A share of ownership in a company. * Bond: A debt instrument that represents a loan to a company or government. * Security: A financial instrument, such as a stock or bond, that can be traded on an exchange. * Exchange: A marketplace where securities are bought and sold. * Broker: A person or firm that acts as an intermediary between buyers and sellers in a securities transaction. * Market Order: An order to buy or sell a security at the prevailing market price. * Limit Order: An order to buy or sell a security at a specific price or better. * Bid: The highest price that a buyer is willing to pay for a security. * Ask: The lowest price that a seller is willing to accept for a security. * Spread: The difference between the bid and ask prices. * Volume: The number of shares or contracts traded in a security during a given period of time. * Liquidity: The ease with which a security can be bought or sold without affecting its price. * Margin: The amount of money that a trader must put up to buy or sell a security on credit. * Short Selling: The sale of a security that the seller does not own, with the expectation of buying it back at a lower price. * Day Trading: The buying and selling of securities within the same trading day. * Stop Order: An order to buy or sell a security once it reaches a certain price. * Market Capitalization: The total value of a company's outstanding shares of stock. * Derivative: A financial instrument that derives its value from an underlying asset, such as a stock or bond. * Option: A contract that gives the buyer the right, but not the obligation, to buy or sell a security at a certain price before a certain date. * Futures: A contract that obligates the buyer to purchase or sell a security at a predetermined price and date in the future. Page