Also known as "dollar cost averaging".
This is purchasing a second lot of a previously purchased stock to lower the overall cost per share.
BEAR MARKET: A period of time when the market is generally declining.
A period of time when the market is generally rising.
COVER: Buying back a stock in a closing transaction to exit a short position which was originally taken.
The high and low of a trading day.
FUNDAMENTAL ANALYSIS: Analysis of a stock which takes into consideration sales, earnings, assets, etc.
This is a service that can only be accessed by your broker. It allows you to trade an hour before the market opens and 30 minutes after the close. SelectNet is also a similar service.
"Initial Public Offering". This is a stock that is new to the market.
LIMIT ORDER: An order to buy or sell at a fixed price.
MARGIN: The minimum amount of money required to buy/sell
a stock. This is using borrowed money.
MARGIN CALL: The demand by a broker to put up money because his securities have declined in value. There are minimum amounts of capital required.
MARKET MAKER: An exchange member who makes a market by buying and selling for his own account when the public is not buying and selling.
MARKET ORDER: An order to buy or sell a stock at the
present market price.
MOMENTUM: The strength behind an upward or downward movement in price.
OVERSOLD: Market prices that have declined too steeply and too quickly.
PRICE EARNINGS RATIO:
The ratio of the price of a stock to the earnings per share.
RESISTANCE: A price level where a stock's price stops rising and moves sideways or downward.
SHORT SALE: (or selling short)
Shorting a stock is where you are betting that a particular stock has hit its peak and will decline. Here is an example of a short sale; you tell your broker that you'd like to short 100 shares of XYZ stock
at, say, $50. (Or if you are using an online broker you would click "sell" and then add in the correct information). What you are doing is "borrowing" 100 shares from your broker. Now you wait for the
stock to decline (or hit the target price if you are following one of our recommendations). Say the target is 40 and XYZ has hit that price. Now you go back to your broker and you're going to give the stock
back (again with on-line trading you would hit "buy" and add the correct information). That's 10 points you made for a profit of $1,000. Before you jumping there are a few things you need to be aware
of. Shorting a stock does not guarantee that the stock is going to go down, so to protect yourself you should always put in a "stop order". It guarantees that you can get out at a specified price if the
stock goes up. Also, not all brokers are going to have access to all stocks for you to short. That is why 2 brokerage accounts is a good idea.
STOP ORDER: An order placed that is not at the
current market price. It becomes a market order once the stock hits the specified price. Buy stop orders are placed above the present market price. Sell stop orders are placed below the present market
VOLATILITY: The measurement of how much an underlying stock fluctuates over a period of time.