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Ask Price
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The lowest price that a
dealer will sell a stock for. Also known as the offer
price.
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Bear Markets
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A stock market in which
sellers dominate, resulting in generally falling prices.
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Beat the Street
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When a company reports
quarterly earnings that come in above what brokerage
firms expect.
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Bid Price
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The highest price that a
dealer will to pay for a stock.
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Break Down
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When a stock drops below a
specified moving average.
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Breakout
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The end of a trend,
signaled by a stock's price increasing or decreasing
past the price at which the trend began; when a stock
rises above a specified moving average.
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Bull Market
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A stock market in which
buyers dominate and where prices are on a rising trend.
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Call Option
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A contract that gives the
buyer of the option the right, but not the obligation,
to purchase a stock at a specific price within a
specified period of time.
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Close
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The end of a market's
trading day; further trading is not conducted until the
open of the next trading day, although there is activity
during after-market trading for several hours through
electronic computer networks.
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Closing Price
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The price at which a stock
finishes at the end of a trading day.
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Consolidation
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A period of limited price
fluctuations following a period of more pronounced price
fluctuations, signaling a relative balance between
supply and demand.
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Did Not Meet
Expectations
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When a company reports
quarterly earnings that come in below what brokerage
firms expect.
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Divergence
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When two or more averages
or indices fail to show confirming trends.
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Dow Jones Averages
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Averages of prices for
categories of stocks traded on the "Dow," such as the
"Dow Jones Industrial Average", the "Dow Jones
Transportation Average," or the "Dow Jones Utilities
Average."
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Down
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The downward movement in
the price of a stock, bond, commodity or market.
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Earnings Per Share
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The amount
of a company's annual profits or earnings attributable
to each ordinary share of that company. Usually
associated with that company's fiscal quarter.
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ECN
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Electronic Communications
Network - independent execution systems set up by
brokerage firms, matching new retail limit orders with
compatible orders already in the system.
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Execution
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The actual buying and
selling of stocks, bonds, commodities - most often
conducted through a stockbroker.
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Fill
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An executed order;
sometimes the term refers to the price at which an order
is executed.
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Gap Down
When a stock moves down in
price when the stock market opens.
This occurs when market makers feel there is negative
news associated with a stock and have the option to set
a lower price prior to market opening.
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Gap Up
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When a stock moves up in
price when the market opens.
This occurs when market makers feel there is positive
news associated with a stock and have the option to set
a higher price prior to market opening.
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High
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The highest price paid for
a stock during a particular time interval.
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Historical Data
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A series of past daily,
weekly or monthly market prices (open, high, low, close,
volume, open interest).
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IPO
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Initial Public Offering -
when a company wants to go public and issues shares.
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Leading Indicators
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Systems used to predict the
direction of a stock or the market.
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Limit Order
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A trader's instructions to
a stockbroker to buy or sell at a particular price or
better.
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Liquidity
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The relative ease at which
a stock can be bought or sold; also, the ability of a
stock to be traded at high volume without its price
being substantially affected.
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Long
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Means the purchase of a
stock with the expectation that it will go up within a
particular time frame.
When the stock reaches a higher price, the trader can
sell it at a profit. Of course, if the trader
"went long' on a stock which happens to go down instead
of up, the trader can lose money.
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Low
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The lowest executed price
for a stock during a particular time interval.
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MACD
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Moving Average
Convergence/Divergence - the crossing of two
exponentially smoothed moving averages that are plotted
above and below a zero line.
The crossover, movement through the zero line, and
divergences generate buy and sell signals.
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Market Maker
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A brokerage firm that
specializes in creating a market for a particular stock
by actively buying and selling shares of that stock.
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Margin
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The percentage paid by an
investor on the total price for shares of stock; the
balance is advanced by the broker.
If the stockbroker determines that the customer's equity
in a margin account drops below a minimum standard, the
broker can issue a margin call - a demand that the
customer send additional money.
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Meet Expectations
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When a company reports
quarterly earnings that are the same as what brokerage
firms expect.
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Moving Average
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An average price for a
stock figured through a certain number of days.
A new average is calculated for the stock each trading
day and plotted on a price and volume chart.
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NASDAQ
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National Association of
Securities Dealers Automated Quotation system.
The NASDAQ is an electronic network of stock quotation
display devices. It provides current price quotes
for many stocks that are traded over-the-counter (OTC),
meaning that they, for the most part, are not listed on
exchanges, but rather are traded through brokers and
dealers. The NASDAQ carries mostly "high-tech"
stocks, such as those of Internet-based companies and
computer manufacturers.
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NYSE
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The New York Stock Exchange
- the largest exchange in the United States.
It lists most of the largest best-known companies and
also many smaller ones.
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Open
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The start of a market's
trading day.
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Opening Price
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The price at which a stock
begins trading at the start of a particular time
interval.
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OTC
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Over-the-counter; stocks
that, for the most part, are not listed on exchanges,
but rather are traded through brokers and dealers.
NASDAQ stocks are traded over-the-counter.
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P/E Ratio
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Price/Earnings ratio -
given by the price of a stock divided by its earnings
per share.
Also called earnings multiple or market multiple.
A stock selling at $100 with earnings of $5 per share
has a P/E of 20.
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Portfolio
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The securities owned by an
investor or company.
A portfolio may include many different categories and
types of stocks and bonds.
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Position
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A trader's holding of a
particular security.
Also, a trader's plan on how to implement an investment
strategy.
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Price
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The amount of money for
which a share of a particular stock can be bought or
sold.
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Put Option
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A contract that gives the
buyer of the option the right, but not the obligation,
to sell a stock at a specified price within a specified
period of time.
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Resistance
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The highest price in a
trading range.
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Risk
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The level of uncertainty
involved in a particular trade.
The term risk refers to the deviation between expected
and realized profit, as well as to the possibility of
losing some or all of your investment. Levels of
risk, of course, vary among investments.
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S&P Stocks
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Refers to those stocks
listed in the Standard & Poor's 500 Stock Composite
Index.
Standard & Poor's, a publisher of financial and
investment reports and services, calculates the index
based on each listed stock's aggregate market value –
its price times the number of shares. It is
therefore value-weighted, not price-weighted as is the
Dow Jones Industrial Average (DJIA). The S&P 500
comprises four separate indexes: 400 industrials, 40
utilities, 40 financial companies, and 20 transportation
companies.
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SEC
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Securities and Exchange
Commission - the regulatory agency that oversees the
securities industry and enforces the federal laws that
protect investors.
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Short
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A trading technique
typically used when a stock is expected to go down in
price.
A "short" sale occurs when an investor sells borrowed
stock with the expectation that the stock's price will
fall. If the investor's expectation proves correct
and the stock's price falls, he can then buy the shares
back at a lower price, return the borrowed stock, and
keep the profits, less the commission to the broker from
whom the investor initially borrowed the stock.
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Short
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A buying back of stock -
hopefully at a lower price - that was sold earlier in
the day by the same trader.
If the stock goes down after the trader executes a short
sell, the trader makes a profit when he buys back those
shares. If the stock goes up, such a short sell
can result in a loss. See also "short". |
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Spread
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The difference between the
"ask" and the "bid" price of a particular stock.
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Stock Split
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An increase in the number
of a company's outstanding shares.
A two-for-one split by a company with 500,000 shares
would result in its having 1,000,000 shares outstanding.
An investor who holds, say, 500 shares before such a
split would have 1,000 shares after the split, although
the overall value of the investor's holdings isn't
immediately affected. A company sometimes declares
a stock split after the market price of its stock has
increased significantly, and the halving of the price
per share would then make the stock more attractive to
smaller investors.
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Stop Loss
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Also known as a "stop
order" or a "stop-loss order."
An order placed with a broker to buy or sell a stock
when the price reaches a specified amount. The
broker then executes the trade by buying or selling at
the market price. A stop order is often used to
limit the extent of possible loss.
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Support
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The lowest price in a
trading range.
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Symbol
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The letters that represent
a company's name, such as "AMR" for American Airlines.
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Ticket Charge
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The charge for executing a
specific trade.
Includes number of shares, fees, taxes and so forth.
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Trend
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The general direction of
price variations in a stock or market.
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Volatility
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A measure
of price variability in an investment or market.
Investments or markets with greater volatility show more
pronounced price swings than less volatile ones.
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Volume
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The number of shares traded
in a day.
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Whisper Number
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The "secret" number that a
brokerage firm expects to be actually posted in a
company's quarterly earnings report, as opposed to the
"street" number - the earnings the general public
believes will be in that report.
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