Trading terms glossary

Every term the game uses, in a sentence or two, with what it's actually for.

Last reviewed 24 August 2026

Price and execution

· Bid: the most anyone will pay right now.
· Ask (or offer): the least anyone will sell for right now.
· Spread: the gap between the two. You pay it going in and again coming out, so it stings twice.
· Order book: all the buy and sell orders waiting at each price. A deeper book swallows bigger orders without moving the price as much.
· Slippage: the gap between the price you expected and what you actually got, because your order ate through several price levels.
· Market order: fills straight away, at whatever the book is offering.
· Limit order: fills only at your price or better, and might never fill at all.
· Stop order: turns into a market order once the price hits your trigger.
· Trailing stop: a stop whose trigger follows the price up at a fixed distance.
· Circuit breaker: a cap on how far a price can move in one day. Margin Call uses plus or minus 25% per share per day.

· Earnings per share (EPS): profit divided by the number of shares.
· Price/earnings ratio (P/E): price divided by EPS. What the market pays for each dollar of profit.
· Multiple: the P/E, talked about as something that moves on its own. "Multiple expansion" means the price went up while profits stood still.
· Market capitalisation: price times the number of shares. What the whole company is priced at.
· Fair value: what a model says a company is worth, as opposed to what it happens to trade at today.
· Dividend yield: the yearly dividend divided by the price.
· Book value: everything the company owns minus everything it owes. Handy for valuing companies that are losing money.

· Beta: how much a share moves compared with the market. A beta of 1.4 means it tends to move 40% more than the index, both ways.
· Volatility: how much prices jump about. It comes in clumps, with calm stretches and wild ones.
· VIX: an index of how much movement the market expects. It shoots up faster than it comes down, and it spikes in a crisis.
· Correlation: how closely two holdings move together. It rises in a crisis, which is exactly when spreading your money stops helping.
· Drawdown: the drop from a peak to the low that follows. The number that really says how bad it got.
· Margin: borrowed money used to hold more than your cash allows. It magnifies both directions.
· Margin call: the demand for more collateral when a borrowed bet moves against you. Also the name of this game.
· Distance to default: how close a company is to being unable to pay its debts, based on its borrowing and how much its assets move.

· Call: the right to buy at a set price before a set date.
· Put: the right to sell at a set price before a set date.
· Strike: the price written into the contract. Expiry: the date the right runs out.
· In the money: the contract would be worth something if you used it now. Out of the money: it wouldn't.
· Intrinsic value: what the contract is worth if you use it right now. Time value: everything you pay above that.
· Implied volatility: how much movement the market is pricing in, worked backwards from what the option actually costs. High means expensive.
· Delta: how far the option price moves when the share moves a point. Gamma: how fast delta itself changes.
· Theta: value lost each day, just from time passing. Vega: how far the price moves per point of implied volatility.
· Volatility crush: the collapse in implied volatility once an uncertain event is over. Most reliable right after results.

· Short selling: borrowing shares, selling them, then buying them back later to return them. It pays off if the price falls.
· Borrow rate: the yearly cost of borrowing those shares, clocked up while you hold.
· Short interest: how many shares are currently sold short.
· Days to cover: short interest divided by average daily volume. The real measure of squeeze danger.
· Short squeeze: forced buying by shorts closing out, which lifts the price, which forces still more of them to close.

· Yield curve: interest rates plotted against how long you lend for. Its shape shows what the market expects next.
· Credit spread: the extra interest a company bond pays over a government bond of the same length. It widens in a recession.
· Taylor rule: a formula linking the central bank rate to inflation and to how far output sits from normal.
· Phillips curve: the link between unemployment and inflation.
· Okun's law: the link between unemployment and growth in output.
· Quantitative easing: a central bank buying bonds, which pushes long-term rates down and share multiples up.
· Business cycle: the swing between growth and recession. Margin Call draws the length of each phase from a Weibull distribution, so long expansions behave realistically.

· IPO: the first sale of a company's shares to the public.
· Lockup: a stretch after an IPO when insiders can't sell. 180 days in Margin Call.
· Proxy fight: trying to win enough shareholder votes to change a company's board or direction. Needs a 5% stake here.
· Ex-dividend date: the day from which buying the share no longer gets you the next dividend.
· Stock split: cutting existing shares into more, smaller ones. It changes nothing about what the company is worth.
· Series A, B and C: rounds of venture funding, each one later than the last.
· Runway: how many months of cash a young company has left at the rate it's spending.

─ [ MC ] ─