STOCK MARKET TERMS

general stock market terms

  • Invest - putting your money where it can grow
  • Stock - a share in the company
  • Dividends - the amount of money paid by the company to its shareholders
  • Common Stock - the type of stock that is least prioritized when declaring dividends, mostly profit from price appreciation
  • Preferred Stock - the type of stock that is first prioritized when declaring dividends
  • Risk - the potential of gaining profits and losing your capital, the more the risk, the more the reward
  • Returns/Rewards - profits earned by investors in their investment either through dividends or price growth
  • Short Term - less than six weeks
  • Medium Term - six weeks to nine months
  • Long Term - more than nine months
  • Investors - people who invests their money with the expectation of gaining returns over longer timeframe
  • Traders - people who buy and sell stocks and earn from price growth over a shorter timeframe
  • Blue-Chip Stocks - stocks of the biggest companies in the country
  • Growth Stocks - stocks which have high growth potential
  • Value Stocks - stocks which have low P/E ratio
  • Speculative Stocks - stocks which are overpriced compared to its similar stocks
  • Defensive Stocks - stocks which does not decrease its price immediately even when the market is down
  • Penny Stocks - stocks which have small market capitalization and trade at very low price
  • Stock Market - where investors or traders buy and sell company stocks
  • Stock Market Index - a measurement of the value of the entire stock market or a particular industry in the market
  • PSEi (aka PSE Composite Index) - the stock market index of Philippine Stock Exchange which consists of top 30 listed companies based on market capitalization
  • Industry Index - the index of a group of companies which are classified based on their business activities (i.e. Financial, Holdings, Industries, Mining & Oil, Properties, Services)
  • Bullish - when a particular stock market or stock is uptrend
  • Bearish - when a particular stock market or stock is downtrend
  • Initial Public Offering (IPO) - when firms are selling their company shares for the first time in the public to raise capital
  • Market Value - the value at which a stock can be sold in the market
  • Unrealized P/L - profits or losses which are not yet realized until the investor has sold the stock
  • Buying Power - the available money an investor has in his account for buying stocks
  • Buy Order - a type of order when the investor wants to buy stocks
  • Sell Order - a type of order when the investor wants to sell stocks
  • Volume - number of shares bought and sold in a particular day
  • Bid - the prices at which the buyers want to buy a particular stock, arranged in descending order
  • Ask - the prices at which the sellers want to sell a particular stock, arranged in ascending order
  • Trade - made when the bid and ask price have matched
  • Brokers - firms who execute the buy and sell orders and get commission fees for every transaction
  • Portfolio - a group of financial assets such as stocks held by the investor
  • Average Cost/Price - the price at which you bought the market plus the commission fees
  • Shares - the number of stocks you bought
  • Board Lot - the standardized minimum and multiple number of shares to be traded for a particular stock, depends per price range
  • Stock Order - ordering stock, either buy or sell order
  • Normal Orders - orders which follow the normal board lot
  • Oddlot Orders - orders which are less than the minimum board lot
  • Good to Day (GTD) - an option in ordering where your order will expire at the end of trading day when not fulfilled
  • Good to Week (GTW) - an option in ordering where your order will last for a week
  • Good to Month (GTM) - an option in ordering where your order will last for a month
  • Good to Cancel (GTC) - an option in ordering where your order will last until you cancel
  • Cash Dividends - dividends declared through cash
  • Stock Dividends - dividends declared through additional shares of stocks
  • Profits/Gains - the amount that an investor earns when he sells stocks at a price higher than his average costs
  • Losses - the amount that an investor losses in his capital when he sells stocks at price lower than his average costs
  • Stock Split - when a company decides to split its stocks in a particular ratio to increase liquidity (i.e. 1 to 2)
  • Reverse Stock Split - opposite of stock split, when a company decides to combine its stocks in a particular ratio to decrease number of shares (i.e. 2 to 1)
  • Most Active - most active stocks in a particular day in terms of volume traded
  • Top Gainers - list of stocks which has increased in price in a particular day
  • Worst Losers - list of stocks which has decreased in price in a particular day
  • Year to Date (YTD) - the period from the beginning of the year (January 1) to present
  • Investment Strategy - set of rules and behaviors an investor practices towards his investment portfolio
  • Peso Cost Averaging - an investment strategy where you put the same amount of money into a particular stock in a regular schedule
  • Value Investing - an investment strategy where investors look for undervalued stocks
  • Growth Investing - an investment strategy where investors look for companies which have a high growth potential
  • Cut Loss - realizing your loss by selling the stock to save you from a bigger loss
  • Average Down - buying a stock for a lower price than your average cost

fundamental analysis

  • Fundamental Analysis - evaluates the economic and financial factors that affect the intrinsic value of a company, studies the causes of market movements
  • Intrinsic Value - the actual and true value of the company based on all aspects of its businesses
  • Overvalued - when the current price of the stock is not justified by its company earnings
  • Undervalued - when the current price of the stock is below its intrinsic value or industry P/E ratio average
  • Income Statement - provides an overview of assets, liabilities and equity
  • Balance Sheet - provides an overview of revenues, expenses and net income
  • Statement of Cash Flows - traces the company's cash movement from operating, investing and financial activities
  • Financial Ratios - ratios derived from the financial statements of the companies which are used for evaluating the overall condition of its company performance
  • Price to Earnings Ratio (P/E Ratio) - measures the current price of a stock over its company earnings per share, the lower the better
  • Earnings per Share (EPS) - company earnings for the year divided by the number of shares
  • Leverage - borrowing capital through loans and using it to fund company activities
  • Debt Ratio - the ratio of total debt to total assets of the company, the lower the better
  • Debt to Equity Ratio/Leverage Ratio - the ratio of a company's debts to the value of its equity (preferred and common stocks)
  • Dividend Payout Ratio - the ratio of dividends paid in relation to company's net income
  • Dividend Yield - the percentage of dividends declared in relation to the stock's current price
  • Par Value per Share - the price of the stock during its Initial Public Offering (IPO)
  • Book Value per Share - the value of the stock in the company's books, total equity divided by number of shares
  • Price to Book Value Ratio - the ratio used to compare company's current price and its book value, the lower the better

technical analysis

  • Technical Analysis - the study of financial market action/ price action
  • Trend - the general direction of a market, or the price of an asset
  • Uptrend - the price of a stock moves at a higher high and a higher low
  • Downtrend - the price of a stock moves at a lower high and a lower low
  • Sideways - the price of a stock moves in a flat manner
  • Chart - contains the summary of a stock's prices within a certain period
  • Open - the first price a stock trades at
  • High - the highest price it reaches in a trading day
  • Low - the lowest price it reaches in a trading day
  • Close - the final trading price of the day
  • Volume - measures the number of shares or value of those shares that trade in a day
  • Value Traded - volume multiplied by the price that investors have paid for a stock
  • Indicators/Oscillators - measure the price movements, momentum, and others based on price and volume of a stock
  • Support - a price level which historically, a stock has had difficulty falling below
  • Resistance - a price level which historically, a stock has had difficulty breaking above
  • Breakdown - a break below the support level
  • Breakout - a break above the resistance level
  • Reversal - the change of a price level from resistance/support to support/resistance after a breakout/breakdown
  • Stop Loss - a price that has been previously identified as the maximum loss a trade can assume