A short-selling glossary for the Stock Market Game

Long. You own the stock. You profit if it goes up.

Short. You have borrowed and sold stock you don't own. You profit if it goes down, and you must eventually buy it back.

Cover / buy to cover. Buying stock back to close a short position.

Short interest. How much of a company's tradeable stock is currently sold short, usually given as a percentage. High short interest means many people are already betting against it — which is both a signal that others share your view and a warning that a rise will force a lot of forced buying.

Short squeeze. A rise that forces short sellers to buy back, whose buying pushes the price higher, which forces more shorts to buy. The reason a short position can lose a great deal very quickly.

Market cap. Share price multiplied by the number of shares. The market's price for the whole company. Roughly: nano-cap under $50 million, micro-cap $50–300 million, small-cap $300 million–$2 billion, mid-cap above that.

Float. The number of shares actually available to trade, which is smaller than the total once you exclude shares locked up by insiders. A small float is why a modest amount of buying can move a stock enormously — and why the move can unwind just as fast.

Liquidity. How easily you can trade without moving the price yourself. Thin liquidity makes every other number less reliable.

Relative volume (RVOL). Today's trading volume compared with what the stock normally trades. An RVOL of 20 means twenty times the usual activity. This is often more informative than the size of the price move: a big move on normal volume is a different event from a big move on extraordinary volume.

Gap up. Opening meaningfully above the previous close, so the price jumped while the market was shut — usually overnight news.

Mean reversion. The tendency of an unusually large move to be partly given back afterwards. The premise behind shorting the day's biggest gainers.

Base rate. How often something happened across a large sample of similar past situations. A fact about history, not a forecast about the stock in front of you.

Catalyst. The identifiable thing that caused a move — an earnings report, a contract, an approval, a merger. A spike with a catalyst behaves differently from one without.

Earnings surprise. The gap between reported earnings and what analysts expected. A company can report and still disappoint; "they reported" and "they beat" are different claims.

Reverse split. Combining shares to raise the price — a 1-for-10 split turns ten $1 shares into one $10 share. Nothing about the company changed, but naive data feeds can render it as an enormous one-day gain.

Halt. Trading is suspended, usually for volatility or pending news. A halted stock can report identical prices day after day, which is why a screener has to filter them out rather than treat them as fresh movers.

• How to short a stock in the Stock Market Game
• Why stocks often fall after a big one-day spike
• A strategy primer for the DECA Stock Market Game
• How orders fill in the Stock Market Game
• The SIFMA Foundation, DECA, and the Stock Market Game

Not investment advice — an educational tool for the DECA Stock Market Game. Terms.