Stock Trading Terminology

stock market chart

Important Stock Trading Terms

The following list may seem long but it only briefly touches upon the plethora of terms used in relation to stocks and stock trading.

Bid Price- or bid is the highest price that a buyer is willing to pay for a security.

Offer Price- or offer is the lowest price that a seller is willing to accept for a security.

After Hours-refers to trading down after the stock market closes.

Blue Chip- refers stock in well respected, large and consistent companies like Microsoft or McDonalds.

Annual Report- This a comprehensive report of showing a company's activities through out the last 12 months. It includes a balance sheet, cash flow statement and Profit & Loss Statement.

Contract Note- This is provided by your broker and outlines your purchase or sale of stock.

Dividends- are a portion of earnings that are distributed to shareholders, normally on a regular basis.

Cum Dividend- This is the period of time that allows the purchaser to receive the current dividend.

Ex-Dividend- This means that the purchaser of a stock is no longer entitled to the current dividend.

Earnings Per Share- Refers to the portion of income allocated to each outstanding common share. It's one of the most important factors for the market to determine the price of a stock.

Capital- refers to the funds that are invested into a company.

Bull- is a person who believes that prices will rise.

Bear- is a person who believes the prices will fall.

IPO- Initial Public Offering, is where a private company issues stock to the general public, via a securities exchange.

Margin Call- occurs when an investors equity in an account that uses borrowed funds to purchase stock drops below the required threshold. At this point in time the investor can either liquidate their positions or add more funds to their account.

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