Glossary of Terms
Glossary of Terms
Annuity
a contract that is bought from an insurance company by an individual. Annuity was designed to provide payments to its holder at given intervals, usually generated after retirement.
Asset Allocation
the procedure where investments are divided into many different categories. Categories may include stocks, cash, real estate,and bonds.
Balance Order
the pairing of same security buy and sell orders. This is done in order to determine the net balance of securities, either to receive or to deliver. The information gathered here gives the market the opportunity to be opened suitably.
Blue Chip Stock
a stock that originated from a stable, successful and prestigious company with an excellent track record of profit growth and dividend sharing is called a blue chip stock.
Call Option
what establishes the right for someone to buy a given or specified quantity of the underlying security at a given price is a call option. This may be done any time during the entire time span of the option. If one expects a rise in prices, they should buy a call option.
Common Stock
a securities holding that allows the possessor to hold ownership of a company that gives benefits. These benefits include things such as dividend sharing and voting rights. The rights of all common stock holders will however come after all other holders, like debt, bond and preferred stock if a liquidation would occur.
Day Trading
the act of buying and selling securities on the same day.
Diversification
investing in a variety of different investments. This is done to reduce the amount of overall risk.
Downtick
a lower stock price transaction.
Fair Market Value
an agreed upon price by both the buyer and the seller. The price is intended to reflect what is based on current market conditions.
Index
taken from a broader number of stocks compared to averages, index is a choice sample of stocks that are used to express the basic trends of the market.
Liquidity
an asset’s ability to be handily converted into cash. It is also used to refer to the market’s ability to take a fair amount of trading at normal prices.
Market Order
an order for buying or selling immediately at current price.
Momentum Trading
investments that are created to capitalize on a sudden drop or rise in stock prices are called momentum trading. They can either be short to moderate length investments and follow certain technical indicators.
Open Interest
the total amount of outstanding contracts by the end of a trading day.
Open Order
an order that stays valid until a customer cancels it
Preferred Stock
a stock holding that gives a specific dividend. The dividend is paid before there are any dividends paid to common stock holders. Preferred stock’s rights come before common stock holders, in the event of liquidation, but are only secondary to bond and debt.
Put Option
the right to sell a specified quantity of the underlying security is established with the help of a put option. The underlying security comes at a specified price for as long as the duration of the option. Buying a put option is wise if you anticipate a price drop.
Short Position
the result of short selling that has not yet been covered is called a short position.
Stop Order
a buy or sell order that is on hold until the market price hits a price that was defined by a customer. The order becomes a market order as soon as it follows through.
Strike Price
a call option buyer’s specified price for buying underlying security. Here, a put option buyer can opt to sell the underlying security.
Uptrends
a security price’s upward movement. This term also applies to the overall market’s upward movement.
Uptrends
a security price’s upward movement. The same also applies to the overall market.
Volume
the amount or number of bonds and shares traded at any given time
Zero Plus Tick
a transaction that has an equal stock price to the price of the last transaction, but higher when compared to the last different price.