STOCK MARKET TERMINOLOGY
THE STOCK MARKET It is a place where shares of public listed companies are traded. The Stock Market allows traders to buy and sell stocks as well as companies to issue stocks.
STOCK All of the shares into which ownership of the corporation is divided.
STOCK SYMBOL A one to four character alphabet symbol which represents a company listed on the exchange.
SHARES Shares are units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.
DIVIDEND A dividend is the distribution of some of a company's earnings to a class of its shareholders, as determined by the company's board of directors. Payments made by publicly listed companies as a reward to investors for putting their money into the venture.
BULL A bull market is a market condition where investors are expecting prices to rise.
BEAR A bear market is a market condition where investors are expecting prices to fall.
BUY To buy shares or take a position in a company.
SELL Getting rid of the shares you own after your goal is achieved or want to cut down losses.
BID Bid is what you are willing to pay for a stock.
ASK- BID SPREAD The difference between what buyers are willing to pay and sellers to get for the shares they own
LIMIT ORDER A limit order is a type of order which executes at the price placed for buy or sell.
MARKET ORDER A market order is a type of order which executes as quickly as possible at the market price.
VOLATILITY Means how fast a stock moves up or down.
GOING LONG Betting on the stock price will increase so that you can buy low and sell high.
AVERAGING DOWN This is when an investor buys as the stock goes down so as to increase the price at which purchased.
CAPITALIZATION This is what the market thinks a company’s value is.
FLOAT This is the number of shares that can be actually traded after deducting the shares held by insiders.
IPO (INITIAL PUBLIC OFFERING) It is an Initial Public Offering that happens when a private company becomes a publicly-traded company.
SECONDARY OFFERING This is another offering in order to sell more stocks and to raise more money from the public.
BROKER A broker is a person who buys or sells stocks on your behalf.
EXCHANGE The place where different types of investment are traded.
PORTFOLIO A collection of investments owned by you.
MARGIN ACCOUNT A margin account lets a person borrow money from the broker to buy shares.
SECTOR A group of stocks in the same sector.
TIME FRAME A Timeframe is the production of a chart that is composed by combining a series of individual price bars together through time, each with the same duration. For example, a daily Time Frame refers to a chart that is made up of individual price bars one day in duration each.
RESISTANCE & SUPPORT are certain predetermined levels of the price of a security at which it is thought that the price will tend to stop and reverse. These levels are denoted by multiple touches of price without a breakthrough of the level.
SPLIT A stock split or stock divide increases the number of shares in a company. A stock split causes a decrease of the market price of individual shares, not causing a change in the total market capitalization of the company. Stock dilution does not occur.
REVERSE SPLIT A reverse stock split is when a company decreases the number of shares outstanding in the market by canceling the current shares and issuing fewer new shares based on a predetermined ratio. For example, in a 2:1 reverse stock split, a company would take every two shares and replace them with one share. A reverse stock split results in an increase in the price per share.
PDT Pattern Day Trade rule is also known as PDT is in place to protect beginner traders. It is important to know this rule if you have less than $25,000 in your bank account or trading account and you are an active trader. The rule states if you are an active trader, meaning if you make 4 or more trades in a 5 day period, then you will be stuck in your fourth trade place. Therefore you won’t be able to make any more trades until your early trades are cleared.
DELISTING Delisting is the removal of listed security from a stock exchange. The delisting of security can be voluntary or involuntary and usually results when a company ceases operations, declares bankruptcy, merges, does not meet listing requirements, or seeks to become private.
GAP UP A gap is a break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between. Stocks that "gap up" are companies that open at prices that are significantly higher than their previous closing prices, often due to after-hours news items that positively affect investor perceptions of a company's value.
GAP DOWN The gap down pattern occurs when the price opens lower than the previous day's close.
CHART ANALYSIS Technical Analysis Technical analysis is the study of the price movement and patterns of security. By scrutinizing a security's past price action, primarily through charts and indicators
TECHNICAL INDICATORS a technical indicator is a mathematical calculation based on historic price, volume, or (in the case of futures contracts) open interest information that aims to forecast financial market direction. Technical indicators are a fundamental part of technical analysis.
MOVING AVERAGE In statistics, a moving average (rolling average or running average) is a calculation to analyze data points by creating a series of averages of different subsets of the full data set
RSI The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.
MACD short for moving average convergence/divergence is a trading indicator used in technical analysis of stock prices, created by Gerald Appel in the late 1970s. It is designed to reveal changes in the strength, direction, momentum, and duration of a trend in a stock's price.