Young Business Network

Archive for the ‘Stock Investing’ Category

ASX: Australian Securities exchange operates the Australian stock exchange, provides market data, announcements and market education.

Bearish: A subjective view that there will be a down trend from a weak market also called a bear market

Bullish: A subjective view that there will be a rise in trend from a strong market also called a bull market.

Capital Gain: Profit made on the sale of an asset that exceeds the initial investment or capital. Taxes may be payable on capital gain.

Capital Loss: Loss made on the sale of an asset that the initial investment or capital exceeded the sale price. A Tax rebate may apply.

Capital: Money invested into a business usually a start-up business, high risk and high reward, success is uncertain.

CFD: Contract For Difference is contracts between two parties the buyer and the seller that states the seller will pay the buyer the difference between the current value of the asset and the value at the time of the contract. Remember if negative the buyer pays the seller the difference.

Commodities: A raw material or product, something valuable or useful that can be bought and sold.

Dividends: A dividend is an amount of money which is paid to the share holders from the company’s after-tax earnings. This payment may be offered as cash or on a DRP (dividend reinvestment plan).

DRP: A dividend reinvestment plan is how some company’s offer to pay its share holders dividends. The company allows you to automatically reinvest your dividends each quarter into additional shares without incurring brokerage fees, sometimes at a reduced price.

Ex-dividend: To be entitled to the dividend you must purchase the stock before it goes ex-dividend, if bought after this date you will not be entitled to the dividend for that quarter.

Long selling: Most commonly used, purchasing a stock to make a profit in a rising market.

Option: A contract between the buyer and the seller which allows the buyer to purchase a particular asset at a later date and an agreed price on or before the expiration date without any obligation.

Public Company: A company that has listed shares on a stock exchange for the public to invest in the company. These shares can be bought and sold freely by the public.

Shares: Part ownership position in a company normally comes with voting privileges about the company’s direction, directors, and share a profit or loss at the end of each quarter.

Short Selling: Going short is an investor selling a stock that they do not own and buying it back later, this strategy is used so an investor can profit in a declining market.

Stop Loss: An order to sell a stock automatically when the price falls to a certain point. This limits the investor’s from further losses.

Trailing Stop: An order to sell a stock automatically unlike a stop loss it follows the price upwards until a down trend takes over the trailing stop is triggered and the stock is sold.

Volume: A share’s volume is the amount of contracts or shares traded in a given period of time, usually measured daily and compared against the daily average volume.

Stock terminology can get confusing in beginners stock trading. It is not that the terms are misleading, but more because there are so many of them to know. If you take the time to learn a few of these beginners stock trading key words at a time, you’ll be set in no time! Below is a list of the most common terms that you should be familiar with.
I also recommend sticking to the ASX (Australian Stock Exchange) for beginners stock trading.

Market / Stock Market / Stock Exchange – An exchange where professional brokers buy and sell stocks.
Trading Hours – The time during which stocks can be traded. In the Australia, trading runs from 10:00am AEST to 4:00pm AEST.
Market Maker / MM – A firm that conducts the trading of shares between other firms or individuals.
Ticker Symbol – A unique letter-based symbol used to represent the company’s stock.
Share – A unit of ownership of a company’s stock.
Authorized Shares – The total number of shares that a company has.
Outstanding Shares – Shares that are available to buy or sell in the market.
Restricted Shares – Shares that cannot be traded for a certain period of time.
Float – Shares that are available for trade by the investing public.
Buy – To purchase shares of a company’s stock.
Sell – To sell shares of a company’s stock.
Commission – A fee paid to your broker for facilitating a purchase or sale of stock.
Bid – The price at which a broker will buy shares (i.e. a sale of shares would be executed at the Bid price).
Ask – The price at which a broker will sell shares (i.e. a purchase of shares would be executed at the Ask price).
Spread – The difference between the Bid and the Ask prices.
Day Order – An order to buy or sell stock that will be canceled if it does not get filled by the end of the trading day.
Good Til Canceled / GTC – An order to buy or sell stock that will remain open for 30 to 60 days (varies by broker).
Limit Order – An order to buy or sell stock that will not go through until the price gets to a specified level, or better.
Trend – The general direction that a stock is moving…upward or downward.
Bearish – Describes a stock that is expected to trend downward.
Bullish – Describes a stock that is expected to trend upward.

These few terms will give you a good start. It is easier to talk about the stock market if you understand these basic stock terms. Learning them will help in your discussions, your research, and in understanding the helpful tools out there.