Stock Market Key Terms and Definitions

Stock Summary Definitons

  1. Ticker symbol - is an abbreviation used to  identify publicly traded shares of a  stock on a stock market.  Without a ticker symbol, you can not buy a stock.
  2. Click here to view a free video that discusses key stock market terms, as they appear on a stock market summary.  Every stock has a stock market summary.
  3. Earnings per share -Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.
  4. Opening price - the initial price of a stock on any given trading day.
  5. Day's range - the high and low price of the stock for that day.
  6. 52 week range - the high and low price of the stock for the year.
  7. Volume - the number of shares that are sold or bought in a trading day.
  8. Average volume - the average number of shares that are sold or bought in a trading day.
  9. Market cap - the total number of shares of a stock, multiplied by the share price.
  10. Beta - tells how predictable a stocks pattern or price is.  A number at 1 or below is very predictable, numbers increasing above 1, progressively are less predictable.
  11. 1 Yr-Target Estimate - this is the price of a stock that analyst are predicting for a particular year.

Buying and Selling Stocks

Orders – stocks are bought and sold using orders.

Common Words and Phrases

  1. Going long - to make money as a stock price increase.
  2. Short Selling (Shorting) - to make money as a stock price decreases.
  3. Appreciate - when a stock's price increases.
  4. Depreciate - when a stock's price decreases.

More Terms

  1. Bull - believes that a stock price will increase
  2. Bear - believes that a stock price will decrease.
  3. P/E ratio - the share price of a stock divided by its earnings per share.  When comparing similar stocks, the stock with the lower p/e ratio is usually the more valuable stock.
  4. Outstanding stock - stock owned by share holders and not the company.
  5. Treasury stock - common stock that has been repurchased by a company and held in a company's treasury.
  6. Over the counter stocks (otc) - stocks that aren’t looked at as favorably as stocks that are listed on major stock exchanges, such as the National Association of Securities Dealers Automated Quotation System (Nasdaq), New York Stock Exchange (NYSE) and the  American Stock Exchange (AMEX).
  7. Stock exchanges - a market in which securities are bought and sold.
  8. United States Stock Exchanges - National Association of Securities Dealers Automated Quotation System (Nasdaq), New York Stock Exchange (NYSE) and the   American Stock Exchange (AMEX).
  9. Investor - person who invests money with the hope of making a profit.
  10. Market value - the current price of a share of stock, times the number of shares that an investor has in a position.
  11. Dividend - Money that a company gives it shares holders, for owning their stock; usually every 3 months, but it can be dispersed, monthly, yearly etc.
  12. Dividend yield - it’s the percentage of each share of stock. The yield is that percentage. If your dividend is $3, and your stock price is $100, then the dividend yield would be 3%. It’s similar to a savings accounts interest percentage.
  13. Earnings Report - it’s a report of important financial documents and metrics, which show if a company is profitable, revenues are increasing, etc. Many companies do reports quarterly.
  14. Conference Call - a call where large investors, such as banks, hedgefunds and other financial entities, ask company representatives such as CEOs, CFOs, etc. questions to determine the health of a company. Sometimes you can hear company leaders get nervous, angry, confident, happy, etc, it gives one information about the company thats not in the financials.
  15. blue chip stocks - large, well known companies with a history of growth and dividend payments.
  16. large cap stocks - a large company with a market capitalization of at least 5 billion.
  17. small cap stocks - smaller companies with market capitalization of 500 million or less.
  18. Hedge fund - a fund that utilizes multiple investing methods to achieve gain.
  19. buy back (repurchasing of stock) - when a company repurchases stock that it previously issued.
  20. Securities - paper or electronic proof or stock ownership.
  21. Position - a stock or group of stocks bought at a specific price.  For example an investor can buy one share of Apple stock at $185; that would be one position.  They can also have a second position by buying 100 shares of Apple stock at $180.
  22. Stock Market Index - a group of individual stocks that are paired together.  They are weighted, meaning each stock is assigned a percentage of the total index.  The plural form of index is indices.
  23. support - a stock price that is difficult for the price to decrease through.
  24. resistance - a stock price that is difficult for the price to increase through.
  25. price targets - the price that analyst predict a stock will be.
  26. sectors - The stock market is divided into sectors.  The sectors represent different areas of business, such as technology, finance, energy, etc.  There are about 11 sectors.
  27. industries - Sectors are divided into industries.  For example Facebook is in the technology sector, which houses the  "Internet Content & Information" industry.
  28. Technical analysis - is used to identify trading opportunities, by analyzing price movement, volume, price levels and other metrics.
  29. Trading hours - The regular stock market hours are 9:30 am to 4 p.m. (EST).  The pre-market hours are 4 a.m. to 9:30 a.m.  The aftermarket hours are 4 p.m. to 8 p.m.

 

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