Glossary
Bear - An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.
Bull - An optimistic investor who is predicting good things for the market, and is attempting to profit from this upward movement. Bulls are the exact opposite of the market's bears
Buy - Order made by an individual to a broker to buy a stock or other security
Buy to Cover - A buy order made on a stock or other security that closes out an existing short position.
Buying Power - The amount of cash an investor has available to buy stock or other security. If an investor has a margin account, the buying power is the sum of the amount of cash available and maximum margin available.
Day Order - Any order to buy or sell a stock or other security that automatically expires if not filled on the day it is placed.
Dividend - A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Dividends may be in the form of cash, stock or property. The dividend is most often quoted in terms of the dollar amount each share receives. It can also be quoted in terms of a percent of the current market price to as dividend yield.
Dividend Yield - The yield a company pays to its shareholders in the form of dividends. It is calculated by taking the amount of dividend per share divided by the share price.
EPS - The portion of a company's profit (net income – preferred share dividends) allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.
Equity - On a company's balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also referred to as "shareholders' equity"
Exchange Traded Funds
Good Till Cancelled - An order to buy or sell a security at a set price that is active until the investor decides to cancel it or the trade is executed. If an order does not have a good-'til-canceled instruction then the order will expire at the end of the trading day the order was placed.
Index Funds
Limit Order - An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.
Long Positions - The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.
Margin - Borrowed money that is used to purchase securities. Also referred to as "buying on margin." Using borrowed money will amplify gains but will also amplify losses.
Market Capitalization (Market Cap.) - The total market value of all of a company's outstanding shares. It's calculated by multiplying total shares
Market Order - Also known as an "unrestricted order," a market order is an order to buy or sell a stock immediately at the best
Mutual Funds - A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the investors annually.
P/E - Valuation ratio of a company's current share price compared to its per-share earnings. Formula Market value per share/Earnings per share
Sell - Order made by an individual to a broker to sell a stock or other security
Sell Short - short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender. The short seller hopes to profit from a decline in the price of the assets between the sale and the repurchase, as he will pay less to buy the assets than he received on selling them.
Short Positions - The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value.
Volume - Volume is an important indicator for traders in analyzing market activity and planning strategy since it is the business of the market itself: the buying and selling of shares. After price, volume is one of the most commonly quoted data points related to the stock market and reflects the overall activity in a stock or market.