After-Hours Trading: This refers to stock trading outside of the traditional trading hours of the major exchanges. This is not a new phenomenon, but has generally been reserved for high net-worth investors and institutional investors, such as mutual funds. The emergence of ECNs has allowed individual investors to participate.
Bear Market: Any financial market in which prices of a security or a group of securities keep falling.
Brokerage: Brokerage is the commission charged by the broker. The maximum brokerage chargeable is determined by the stock exchange controlling authority of each country.
Bull Market: Any financial market in which prices of a security or a group of securities keeps rising.
Capital Gain: The amount by which an investment’s selling price exceeds its purchase price.
Capital Loss: The negative difference between the selling price of the stock and the purchase price of the stock.
Closing Price: The last traded price of a security at the end of a trading day.
Day Trading: Buying and selling the same stock or option position in one day’s trading session, thus ending the day with no position.
Demand: The desire, ability and willingness on the part of consumers to buy goods or services. Typically demand is determined by income and by price, which are, in part, determined by supply.
Diversification: The allocation of assets among various types of investments.
Dividend Reinvestment: Dividends that are reinvested in the security that generated them.
Earnings Per Share (EPS): This measure expresses how much the company is earning for every share held. It is calculated by dividing pre-tax profit by the number of shares issued. Earnings per share is more important than the overall reported profit, because the EPS provides a better measure of profitability.
Exercise: The act of an option holder who chooses to take delivery (calls) or make delivery (puts) of the underlying interest against payment of the exercise price.
Fiduciary: One who is legally required to manage assets in the best interest of a trust of a beneficiary or minor.
Hedge: A strategy used to limit investment loss by making a transaction that offers an existing position.
Level I: Will display the current best bid and ask prices, volume, close price from the previous trading day, open price, high and low price for the day, and perhaps the ratio of shares or market participants between the bid and ask. Use the SureTrader 2.0 platform for Level I data.
Level II: Level II provides a view of all market makers and ECNs making a market in a particular security. It will display the different price levels, market maker and/or ECNs participating, and for how many shares. It may also show the times that they posted their bids and asks, plus their market status (open or closed for trading). This can give some insight into the depth of a security’s trading. Use the SureTrader Pro platform for Level II data.
Penny Stocks: Low-priced speculative issues of stock selling at less than $1.00 per share.
Stock Exchange: The place where stock trading takes place and where your transactions are executed through your broker.
Technical indicators: These indicators show the direction of the market, when you should likely buy and sell, when to book profit and when to not to anything. They are derived from the price and volume values.
Value Investing: A method of stock trading, where an investment is made in undervalued companies that have high intrinsic value.