Aggressive: A high-return stock strategy that usually involves highly speculative trading with a significant risk of loss.
Bear Market: A period of declining market prices generally accepted as starting 20% or more from the peak, or top of the market.
Blue Chip Stocks: Large cap stocks with a proven track record of positive performance and profitability.
Bull Market: A period of increasing market prices generally accepted as starting 20% or more from the low, or bottom of the market.
Buy and Hold: This is a long-term trading strategy where an investor buys stock to hold for the long term.
Buy at Open: This is when an order is placed prior to the market opening.
Capital Gain: The amount of money earned by selling a stock.
Capital Loss: The amount of money lost by selling a stock.
Conservative: A lower return approach that requires less risk than an aggressive strategy.
Cost Basis: The cost of purchasing a financial asset and any option trading strategies used with the same position.
Cover: Repurchasing a previously sold contract.
Current Market Value: The value of a security or portfolio of securities.
Day Trader: A trader who makes short-term speculative trades.
Deflation: Contraction in the volume of available money and credit resulting in a decline in previously inflated prices.
Diversification: Where a trader invests in securities over a range of different markets and, or sectors.
Dividends: The distribution of earnings directly to all or part of a company’s shareholders.
Equity: Ownership in a corporation, in the form of common or preferred stock.
ETF: (Exchange Traded Fund) These are funds that aim to track an underlying security. Some ETFs include oil, gold and currencies.
ETN: (Exchange Traded Note) A structured investment product that is based on Debt Notes. These Notes trade intraday like a stock.
Fundamental Analysis: An examination of the fundamentals of a company to assess the value of a security.
Going Long: Purchasing stock with the expectation that profits will come from an increase in the exchange rate.
Going Short (Selling Short): Purchasing stock when a trader plans to make a profit from a drop in the value of the traded assets.
Growth Strategy: Investing in companies that are growing faster than others in the same industry, with the goal of generating capital gains rather than dividends.
Hedge Funds: Investment funds actively managed for a limited number of investors and institutions, using a wide range of investment strategies, methods and tools. Hedge funds usually require high minimum investments and are managed by professionals charging management and performance-based fees.
Inflation: Expansion in the volume of money and credit available that results in an increase in prices at faster than normal levels.
Large Cap: Companies with a market capitalization value of 10 billion US dollars or more.
Limit Order: An order stating the highest price you are prepared to pay for a stock. These orders are placed at a price lower than the current market price.
Long-Term: Investing over a long period of time, typically over five years.
Margin Account: A trading account where the stock broker is prepared to lend you additional funds to invest with.
Market Order: An order that gets sent into the market and gets filled at the next available price.
Mid Cap: Corporations with a market capitalization value between 2 and 10 billion US dollars.
NAV: (Net Asset Value) The value per share of a mutual fund or closed-end fund calculated by taking the total assets minus liabilities of the fund, divided by the number of outstanding shares.
Open a Position: This is where a position is opened to buy or sell a security.
OTCBB Stock Trading: (OTCBB = Over-the-Counter Bulletin Board) Trading involving much more risk, caution, potential volatility and practice.
Overbought/Oversold Indicator: Many technical indicators such as the Relative Strength Index (RSI) show when prices are overbought and oversold. This can often be indicative of a good buy or sell opportunity.
Overweight: Being overweight means that an investor’s portfolio holds more of a particular type of stock compared to the weight of that type of stock, in the relevant index. For instance, if an investor’s portfolio is comprised of 30% Growth stocks, and that Growth stocks represent 20% of the associated index, the portfolio is referred to as ‘10% overweight’ in Growth stocks.
Quantitative Analysis: The process of applying numerical values and mathematical formulas to a company’s financial statistics, such as revenues, debt, income and market share.
Reverse Stock Split: Also know as a Reverse Split, this is an action taken by a corporation that reduces the number of stock shares outstanding and increases the value of each individual new share produced after the exchange.
Risk Management: A management plan set out to keep risk under control. One part of this is often the amount of your account risked on each trade.
Risk Tolerance: Refers to the amount of risk a trader is prepared to take with his/her funds.
Small Cap: Small cap, or small capitalization corporations, typically holds a market capitalization of between 300 million and 2 billion US dollars.
Spread: This is the difference between the buy and sell price. Lower spreads mean lower costs to the trader.
S&P 500: S&P 500 stands for the market-value weighted index of Standards and Poor’s choice of 500 large cap common stocks traded currently in the United States. It is a good representation of the American economy as a whole.
Stop Loss: An order that can be placed at a certain price or percentage point to help minimize losses of a position you already have open. Once triggered, this order becomes a “market” order.
Technical Analysis: This refers to using historical price action to predict where the price will head in the future. Common tools used in technical analysis include picking out previous highs and lows, using technical indicators, pivot points, trend lines and fibonacci retracement lines.
Ticker Symbol: A symbol for a stock that it can be identified with. Every stock has a symbol, up to 5 letters long. For example, Microsoft has the symbol MSFT.
Trend Line: A Trend Line is a line drawn on a chart that connects two or more points and extends into the future. The trend line drawn can be used to help identify past and future support and resistance levels.
Volatility: The rate price action moves up and down. It is calculated by the annualized standard deviation of the daily change in price.
Volume: The number of trades during a given time frame on an exchange or for an individual security.
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