American Depositary Receipts (ADRs): A security issued by a US bank that represents shares of a foreign company and trades on US exchanges.
Automated Customer Account Transfer System (ACATS): An electronic system that moves investments from one brokerage account to another.
Buy one-time order: A buy order type that is routed within up to +2% of the current NBBO and auto‑cancels after 5 seconds if not fully executed.
Capital gain: The profit realised when a stock or fund is sold for more than its cost basis.
Capital loss: The realised loss from the sale of a stock or fund when the selling price is less than the cost basis.
Cash dividends: A payment made in cash by a company to its shareholders, usually from the company’s retained earnings.
Circuit breakers: Automated mechanisms that pause market-wide or single stock or fund trading in reaction to rapid and significant price movements.
Corporate actions: An event or activity undertaken by a publicly traded company that may have a material impact on its share value and shareholder.
There are two main types:
Mandatory Corporate Actions: Mandatory corporate actions, such as stock splits, mergers, and dividends, automatically apply without the consent of shareholders. For example, dividends are distributed to eligible shareholders automatically and do not require shareholder action.
Voluntary Corporate Actions: Voluntary corporate actions, such as rights offers, stock buybacks, or tender offers, give eligible shareholders the option to participate in the event or activity taken by the company. For example, with a rights offer, shareholders will have the option but are not required to participate and purchase new shares.
Cost basis: The price paid by a consumer to purchase stock or fund, including the purchase price and associated fees. Cost basis is used to calculate capital gains or losses for tax purposes upon sale.
Day Trading: A trading strategy where a stock or fund is bought and sold within the same trading day in an attempt to profit from small movements in price.
Delisting: When a company’s stock is removed from a major US exchange, typically because it no longer meets an exchange's listing requirements, merges with another company, or chooses to go private. Once delisted, the stock may no longer be available for trading on Coinbase Capital Markets.
Dividends: Companies distribute a portion of their profits to shareholders as dividends, usually in cash or additional shares.
Exchange-Traded Fund (ETF): An investment fund that holds more than one asset but is traded on an exchange like a stock. ETFs mimic the investment returns and yield of an index, a commodity, bonds, or a basket of assets.
Fiat currency: Money that a government considers to be legal tender such as the U.S. Dollar, Euro, and Japanese Yen
Fractional shares: Represents ownership of less than one full share of a company’s stock or a fund. Instead of buying based on the number of shares, fractional shares allow for a specific dollar amount to be invested in a security, regardless of its share price.
Good-till-cancelled (GTC): A time-in-force setting for limit orders on Coinbase and Coinbase Advanced. A GTC order remains active until you cancel it or 90 days from submission, whichever comes first.
Initial Public Offering (IPO): The process through which a company offers its shares to the public for the first time, allowing it to raise capital from public investors on a stock exchange.
Internal Revenue Service (IRS): The U.S. government agency responsible for tax collection and tax law enforcement, including regulations related to capital gains and investment income.
Limit up-limit down (LULD) circuit breaker: Automated mechanisms that temporarily pause the trading of an individual stock or fund when there is extreme volatility. LULDs are triggered when a stock or fund exceeds a calculated price band within a trading day. LULD circuit breakers can be triggered for either extreme price increases or extreme price declines.
Liquidity: The ease with which a trader can quickly buy or sell an asset without impacting its price.
The number of buyers and sellers that are readily available to trade an asset or the total amount of cash, crypto, stocks, or funds being exchanged between buyers and sellers are both good indicators of how liquid the asset is.
Assets that have low liquidity often lead to high slippage (the difference between the expected price of an order and the price where the order actually executes) when buying or selling the asset.
Limit order: A buy or sell order that executes at a specified price or better. Limit orders are executed only if the market price reaches the designated limit price.
Market capitalisation: The total current value of a company. Market capitalisation is calculated by multiplying the total number of outstanding shares by the current share price.
Market order: A buy or sell order that executes immediately at or near the current National Best Bid and Offer (NBBO). Market orders are available on Coinbase Advanced during regular market hours only (9.30 – 16.00 ET).
Market-wide circuit breaker (MWCB): Circuit breakers are triggered in the event of a severe market decline. If triggered, a MWCB can halt all trading activity temporarily or for the remainder of the trading session. MWCBs are defined by a set of rules created by the SEC and implemented by the exchanges.
National Association of Securities Dealers Automated Quotations (Nasdaq): An electronic stock exchange. It is known for listing technology and growth stocks, as well as others. Nasdaq is the second-largest stock exchange in the world by market capitalisation.
National Best Bid and Offer (NBBO): Represents the highest price a buyer is willing to pay (best bid) and the lowest price a seller is willing to accept (best offer) across all US exchanges for a stock or fund.
New York Stock Exchange (NYSE): A stock exchange located in New York City where investors buy and sell shares of companies. NYSE is the largest stock exchange in the world by market capitalisation.
One-time order: One-time orders to buy a specific quantity of an asset will be submitted as limit orders with a 2% price boundary to prevent execution at any price over 2% higher than the National Best Bid and Offer (NBBO) at the time. All other orders attempt execution at the current NBBO, with any unfilled amount also being cancelled after 5 seconds.
Partially filled order: Only a portion of the total requested quantity has been fulfilled. The unfilled remaining quantity remains active as an open order in the market.
Pattern Day Trader (PDT): According to FINRA rules, a customer is considered a PDT if they execute four or more ‘day trades’ in a margin account within five business days.
Pending order status: The order has been submitted but is awaiting initial review or processing before being sent to the exchange and becoming an active open order.
Proxy voting: Voting by proxy is a mechanism for casting a vote on a matter, which can include corporate actions. It is a limited power of attorney that a shareholder is granting to another person to vote on their behalf.
Realised return: The actual gain or loss you receive after selling an investment. Calculated as asset sale price less asset purchase price.
Record date: Day on which a company's records are checked to identify which shareholders are eligible for dividends, shareholder meetings, and other corporate actions.
Rights offering: Occurs when a company issues new shares of stock and provides existing shareholders with the opportunity to purchase them at a set price before the shares are offered to the public. These rights are typically granted in proportion to current holdings and expire at a specified date.
Securities and Exchange Commission (SEC): The US government agency responsible for regulating the securities industry, enforcing securities laws, and protecting investors.
Sell one-time order: A sell order type that is routed at the NBBO and auto‑cancels after 5 seconds if not fully executed.
Settlement: Stock and fund trades settle on a T+1 basis (one business day after the trade date). Cash must be settled before initiating a transfer or reinvesting. In other words, cash from a stock sale will not be available for withdrawal or trading until one business day after the sale.
Share: A single unit of ownership in a stock or fund.
Shareholder meetings: Publicly traded companies hold shareholder meetings at least once a year for shareholders to receive information on the company's performance and vote on company matters such as director elections and corporate action approval.
Spin-offs: When a company separates part of its business, such as a division, brand, or subsidiary, into an independent company. The original company may choose to issue shares of the new independent company. For example, if Company A spins off Subsidiary B, shareholders may receive shares of B based on a set ratio.
Stock: A type of security that represents ownership in a company, entitling the shareholder to a portion of the company’s assets and earnings.
Stock Exchange: Centralised and regulated marketplaces that allow the trading of ownership shares in companies.
Stock dividends: A payment made to shareholders in the form of additional shares of the company’s stock.
Stock splits: Stock splits change the number of shares outstanding by increasing (forward split) or decreasing (reverse split) the number of shares. While the share count changes, the total value of your investment remains the same.
T+1 settlement: Process by which a stock or fund transaction is finalised one business day after the trade date. In other words, cash from selling a stock or fund will not be available for withdrawal or trading until one business day after the sale.
Tender offers or buy-backs: When a company or investor group offers to purchase some or all of the outstanding shares of another company directly from shareholders. A tender offer includes a specified offer price and usually expires by a specified date.
Ticker: A ticker is a symbol representing a token, cryptocurrency stock or fund. For example:
Bitcoin: BTC
Ethereum: ETH
Solana: SOL
Apple: AAPL
Amazon: AMZN
Time-in-force (TIF): Specifies how long a limit order remains active before it is executed or expires. On Coinbase Advanced, the following options are available for limit orders:
Day (Market hours): The order is valid until the end of the current trading day and may only execute during regular market hours (Mon–Fri 9:30 AM–4:00 PM ET).
Day (Extended): The order is valid beyond the end of the current trading day and may be executed during any session.
Good til cancelled (Market hours): The order remains active until you cancel it or 90 days from submission, whichever comes first (Mon–Fri 9:30 AM–4:00 PM ET).
Good til cancelled (Extended): The order remains active during all sessions until you cancel it or 90 days from submission, whichever comes first (Mon–Fri 07.00–20.00 ET).
Total return: The overall gain or loss of your portfolio. It’s a combination of your unrealised and realised gains. This shows the current value of your holdings and proceeds minus your cost basis.
Trading halt: Trading halts are temporary pauses in trading activity implemented by stock exchanges. These trading halts are enacted for various reasons such as significant corporate news pending release and dissemination, the stock or fund is not compliant with SEC listing requirements, a regulatory concern, or other market factors.
Trusted Contact Person (TCP) or Trusted Contact: Individual authorised by an account holder to be contacted by their financial institution in limited, specific circumstances regarding the account
Unrealised return: The potential gain or loss on an investment that has not yet been sold. Calculated as current asset price less asset purchase price.
Volatility: A measure of price change over a specified amount of time.
Stock Warrants: Assets issued by a company that grants shareholders the right, but not the obligation, to purchase the company’s stock at a fixed price (the exercise or strike price) before a specified expiration date.
Wash sale: Occurs when an investor sells a share or fund at a loss and buys a substantially identical security within 30 calendar days before or after that sale for a 61-day period. Wash sale losses are disallowed.
Disclosures
All securities and investments are offered by Coinbase Capital Markets Corp, member FINRA/SIPC. Securities services offered by Coinbase Capital Markets Corp are separate from digital asset services provided by Coinbase Inc. and any affiliates. SIPC does not apply to digital assets or cash held in your Coinbase Inc. or affiliate account. Additional information about your broker, Coinbase Capital Markets Corp, can be found on FINRA’s BrokerCheck (https://brokercheck.finra.org). Execution, clearing and custody of all securities are provided by APEX Clearing Corporation.
Options trading involves risk. Most options contracts expire worthless, and you can lose the entire premium paid for a contract. Options also lose value over time as they approach expiration (time decay), and if you hold a short options position, you may be assigned an obligation to buy or sell the underlying stock. Before trading, review the Characteristics and Risks of Standardised Options disclosure.
For UK customers, stock trading is offered by CB Payments Ltd (CBPL), which is authorised and regulated by the Financial Conduct Authority (FRN: 1045733). CBPL is authorised to arrange access to Coinbase Capital Markets Corp and Apex Clearing Corporation for execution, clearing, and custody.
Futures products and services are offered in the U.S. by Coinbase Financial Markets, a member of NFA and is subject to NFA’s regulatory oversight and examinations. Access to the referenced financial products requires user eligibility and may not be available in all jurisdictions. The risk of transacting in futures can be substantial and may not be suitable for everyone. Not investment advice or a recommendation to trade a particular contract or to employ a particular strategy.
Outside the U.S. (excluding India and Australia)
Outside U.S., derivatives are available only to eligible users in select jurisdictions and are offered by Coinbase Bermuda Ltd., a Class F entity licensed by the Bermuda Monetary Authority. All trading and investment strategies involve risk, including loss of capital, and may not be suitable for all. Leverage in derivatives trading can work for you or against you.
India
Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
Coinbase India Private Limited is registered with FIU-IND to provide virtual digital asset services.
Australia
In Australia, derivatives trading is offered by Coinbase Australia Pty Ltd ACN 654 922 442 ("Coinbase Australia"). Any advice provided is general in nature and has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice having regard to your own circumstances. Derivatives Trading is high risk and you may lose your entire balance. Before making any decisions about whether to use a product, you should read the applicable Product Disclosure Statement, Financial Services Guide and Target Market Determination.
Coinbase Australia is licensed and regulated by the Australian Securities and Investments Commission (‘ASIC’), AFSL No. 569752. Coinbase is also registered and enrolled with the Australian Transaction Reports and Analysis Centre ("AUSTRAC") as a virtual asset service provider and a remittance service provider.
This article is for informational purposes only and does not constitute the provision of investment advice. The customer assumes full responsibility for its trading activity and should consult its advisors for its specific situation. This material is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal or tax advice, or investment recommendations. The information is believed to be current as of the date indicated and may not be updated or otherwise revised to reflect information that subsequently became available or a change in circumstances after the date of publication. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. Recipients should consult their advisors before making any investment decision.
‘Funds’ in this article is a generic term and may refer to exchange traded funds (ETFs) and/or mutual funds. Securities products are subject to availability and may change at CCM's discretion. See the most up-to-date information on CCM's product offerings.