Stock Trading Cheat Sheet 2026
The 30 highest-yield Stock Trading facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.
- What does high trading volume during a price breakout suggest? → The breakout has stronger conviction and is more reliable
- Which statement best describes an out-of-the-money (OTM) put option? → The put's strike price is below the current stock price
- Value investors frequently utilize the DCF method to determine the fair value of a company or business. The acronym DCF stands for → Discounted Cash Flow
- How should an Stock Trading professional present complex information to non-experts? → Translate into accessible language, use visuals, and check for understanding
- A bull call spread involves: → Buying a lower-strike call and selling a higher-strike call with the same expiration
- What is a 'moat' in the context of fundamental stock analysis? → A sustainable competitive advantage that protects market share
- What role does active listening play in Stock Trading practice? → It ensures accurate understanding, demonstrates respect, and improves outcomes
- A protective put is best described as: → Buying a put option on a stock you already hold to limit downside risk
- What does the Stochastic Oscillator measure? → A security's closing price relative to its price range over a specific period
- Implied volatility (IV) in options pricing represents: → The market's expectation of future price volatility embedded in option prices
- What is the first step in risk assessment for Stock Trading professionals? → Identifying potential hazards and vulnerabilities in the specific context
- What is the significance of the current ratio in fundamental analysis? → It assesses a company's ability to pay short-term obligations
- The current share price multiplied by the entire number of shares of a company's stock equals the current share price. → Market Capitalization
- What is the purpose of regular risk reviews in Stock Trading practice? → To identify new risks, evaluate control effectiveness, and update mitigation strategies
- A ____ is when a firm buys shares of its stock from current shareholders. → Share buyback
- What is the benefit of standardized digital reporting in Stock Trading practice? → It ensures consistency, enables comparison, and facilitates regulatory compliance
- What is the primary value of case study analysis in Stock Trading training? → Developing critical thinking by applying theory to realistic professional scenarios
- When the price of a stock drops from its historical highs to a previously-attained lower milestone, this is referred to as a → Retracement
- The Volatility Index (VIX) is a → An indicator used to measure the perceived volatility of stock prices
- When a stock buyer establishes a maximum price that he or she is willing to pay, the buyer is putting a → Limit Order
- What does the MACD indicator stand for? → Moving Average Convergence Divergence
- What does 'asset allocation' refer to in portfolio strategy? → The distribution of investments among different asset classes like stocks, bonds, and cash
- How should Stock Trading professionals prioritize identified risks? → Based on likelihood of occurrence combined with severity of potential impact
- How should an Stock Trading professional handle a situation outside their scope of competency? → Recognize limitations and refer to or consult with appropriate specialists
- What does a 'bearish engulfing' candlestick pattern suggest? → A potential bearish reversal after an uptrend
- Which financial statement shows a company's revenues and expenses over a period? → Income statement
- What is a 'support level' in technical analysis? → A price floor where buying interest tends to prevent further decline
- What does 'alpha' represent in portfolio performance? → The excess return generated above a benchmark, adjusted for risk
- What does a 'golden cross' indicate in technical analysis? → The 50-day moving average crosses above the 200-day moving average
- What is 'diversification' in portfolio management? → Spreading investments across different assets to reduce risk
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