Stock Market Glossary
Capital gains tax
Direct tax on capital gains, part of the withholding tax in Germany.
In brief: Direct tax on capital gains, part of the withholding tax in Germany.
Meaning in practice
Banks automatically pay them to the tax office. With foreign brokers, the investor must declare capital gains himself in the tax return.
Context for investors and traders
For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.
