Glossary

Stock market terms, translated into usable research language.

Definitions are only useful when they help you make cleaner decisions. This glossary explains common finance terms the way they appear in Sigma Terminal research: valuation, thesis building, scenario analysis, and risk control.

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Core terms

Start with the language of a research memo.

Each term includes a plain-English definition, why it matters, and how to use it responsibly.

Valuation

P/E Ratio

Compares a company's share price to its earnings per share.

Scenario

Bull Case

The upside version of a thesis if key assumptions improve.

Scenario

Bear Case

The downside version of a thesis if risks become more important.

Risk

Risk/Reward Ratio

Compares estimated upside against estimated downside before a trade.

Portfolio

Position Sizing

Decides how much capital to allocate to a single idea.

Risk

Stop Loss

A predefined exit level or rule used to limit downside.

How to use this glossary

Terms should sharpen your process.

Finance language can create false confidence. Knowing the phrase "multiple expansion" is not the same as understanding what could cause investors to pay a higher multiple. Knowing the phrase "stop loss" is not the same as having a complete risk plan.

Use these definitions as building blocks. Pair valuation terms with business quality, pair scenario terms with catalysts, and pair risk terms with position sizing. The more explicit your assumptions are, the easier they are to review later.