Financial Glossary

All the terms you need to know

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51 terms

Sharpe Ratio
Metrics
Measures whether an asset earns enough relative to its risk. A higher value is better.
CAGR
Metrics
Average yearly growth. If you invested €1 000 and have €1 210 in 2 years, your CAGR is ~10 %.
Max Drawdown
Metrics
The biggest drop from a peak to a trough. If your portfolio drops from €10 000 to €7 000, the max drawdown is 30 %.
VIX
Indicators
The "fear index". It shows how much uncertainty is in the market. High VIX = more fear.
Yield Curve
Indicators
The difference between long- and short-term bond interest rates. An inversion may signal a recession ahead.
ETF
Concepts
A fund you buy like a stock, but it holds many assets. Think of it as a diversified "package".
BULL
Concepts
The model expects the market to rise. It is the model's reading, not an instruction: its model portfolio keeps its monthly top-3.
BEAR
Concepts
The model believes the price will drop. It is its reading: the portfolio does not move to cash because of it, unless the VIX Shield acts.
NEUTRAL
Concepts
The model sees no clear trend. Its model portfolio does not change because of it: it keeps the top-3 chosen at the start of the month.
Ensemble
Concepts
Instead of a single model, LearnAImarkets combines several. Like asking multiple experts and going with the majority.
Backtest
Concepts
Testing a strategy on past data to see if it would have worked. No guarantee of future results.
Spearman Correlation
Metrics
Measures whether the model's predictions follow the correct order. 1 = perfect, 0 = random.
Accuracy
Metrics
Percentage of times the model was right. 70% accuracy = 7 correct out of 10 predictions.
Alpha
Metrics
Extra gain the strategy generates vs the benchmark. Positive alpha = beats the market.
Profit Factor
Metrics
Money gained divided by money lost. A value of 2.0 means you win twice what you lose.
Win Rate
Metrics
Percentage of trades that were winners. 60% win rate = 6 out of 10 trades made money.
Volatility
Metrics
How much prices go up and down. High volatility = big changes, low volatility = small changes.
Rebalances
Metrics
Times the strategy changed portfolio weights. More rebalances = more trades.
Credit Spread
Indicators
Difference between interest on safe bonds and risky bonds. If it rises = markets are fearful.
DXY
Indicators
US dollar index. High DXY = strong dollar, low DXY = weak dollar.
EUR/USD
Indicators
Price of the euro in dollars. 1.10 means 1 euro is worth 1.10 dollars.
Oil (WTI)
Indicators
Oil price in dollars per barrel. When it rises, gasoline and transport get more expensive.
Regime
Concepts
The market "state": bullish (bull), bearish (bear), or neutral. The model publishes its regime reading; it does not change exposure because of it.
Feature
Concepts
A piece of information the model uses to decide. Examples: VIX, oil price, momentum.
Walk-Forward
Concepts
Testing the model on data it never saw during training. This shows if it works in the real world.
Guardrail
Concepts
Automatic rules that protect the portfolio in extreme situations. Like emergency brakes.
Risk Multiplier
Concepts
A number that used to adjust how much is invested by confidence. Today it is fixed at 1: the portfolio is invested unless the VIX Shield acts.
SMA200
Concepts
Average price over the last 200 days. If price is above, the trend is good.
Bollinger Bands
Concepts
Bands that mark if the price is very high or very low compared to its normal range.
RSI (14)
Indicators
Indicator from 0 to 100 showing whether an asset is overbought or oversold.
MACD
Indicators
Compares two moving averages to detect trend shifts and momentum strength.
ATR
Indicators
Measures the average daily price movement. Useful to estimate risk.
Fibonacci
Indicators
Technical levels where price often pauses or bounces (23.6%, 38.2%, 50%, 61.8%, 78.6%).
Slippage
Concepts
Difference between expected trade price and actual execution price.
Take-Profit
Strategy
Target price used to close a position with gains.
Stop-Loss
Strategy
Protection level that limits the maximum accepted loss.
Support
Concepts
Price zone where buying interest appears and downside often slows.
Entry Score
Metrics
0-to-100 score that summarizes how much technical confluence there is today at the entry point.
Exit Score
Metrics
0-to-100 score measuring how much technical exhaustion and proximity to the exit target a position shows.
Execution Score
Metrics
0-to-100 score of expected execution quality (cost and friction).
Buy Target
Strategy
Reference entry price used in technical analysis to judge how far the current price is from that level.
Target Gap
Strategy
Percentage distance between current price and target.
Relative Volatility
Indicators
Price-adjusted volatility (ATR/price). Shows how noisy the asset is.
Core12
Strategy
The 12 ETFs LearnAImarkets uses: global equities, bonds, gold, factors, and sectors. Automatic diversification.
Tactical Allocation
Strategy
Changing portfolio weights based on conditions. Not always everything invested in the same thing.
Z-Score
Strategy
Number that says if something is above or below average. Z-score of 2 = much higher than normal.
Prediction Horizon
Strategy
How far into the future the model predicts. Example: "how will the market be in 3 months".
Benchmark
Strategy
A comparison point. If the benchmark rises 10% and the strategy rises 15%, we gain 5% extra.
Champion/Challenger
Strategy
The current model ("champion") competes with a new model ("challenger"). If the challenger is better, it becomes champion.
ISIN
Concepts
A unique 12-character code that identifies an ETF or stock — like a passport number for a security. Starts with a 2-letter country code.
TER
Concepts
Total Expense Ratio: the annual cost of the ETF as a percentage. A TER of 0.07% means you pay €0.70 per €1,000 invested per year.

ETF, investing and AI glossary