Pathshala: Trading Dictionary

<div dir="ltr" style="text-align: left;" trbidi="on">
 
<div style="text-align: justify;">
Trading Dictionary</div>
<div style="text-align: justify;">
 </div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<div style="text-align: justify;">
ACTIVE SHARES: Share in which there are frequent and day to day dealings,
as distinguished from partly active shares in which dealings are not so
frequent. Most shares of leading companies would be active, particularly those
which are sensitive to economic and political events and are therefore, subject
to sudden price movements. Some market analysts would define active shares as
those which are bought and sold at least three times a week, East to buy or
sell.</div>
 
<div style="text-align: justify;">


AUTOMATED SCREEN TRADING: Electronic
Trading in Stocks through visual display units. The associated computer unit
enters, matches, and executes deals. It makes possible a floor less exchange
and brings transparency to deals.</div>
 
<div style="text-align: justify;">



BLOCK TRADE: Trading large blocks of
shares, usually by mutual funds or institutional investors. There are
specialist brokers who carryout the trade discreetly, without unduly affecting
the price movement of shares.</div>
<div style="text-align: justify;">
 </div>
<div style="text-align: justify;">



BLUE CHIPS: Shares of particularly
well known and established companies which have shown consistent growth over
the years, have bright future prospects, and are expected to continue sustained
growth in the future.</div>
 
<div style="text-align: justify;">



BOND: An instrument of loan raised by
the government, bank or a company against a specified interest rate and a
promised date of repayment. Company bonds are called Debentures, which are
secured by mortgage against company assets, as distinguished from fixed deposits accepted by companies, which are un secured.</div>
<div style="text-align: justify;">
 </div>
<div style="text-align: justify;">



BOOK CLOSURE: A company before
declaring a Dividend, Issue of bonus or rights shares, closes its register of
members for a certain period during which no transfer of shares is registered.
Only those share holders whose names appear on the register after the book
closure are eligible to receive dividends and bonus shares and entitlement to
rights shares.</div>
 
<div style="text-align: justify;">





BOOK LOSS: A trader will sustain loss
only when he sells shares whose prices are fallen. Until then he will incur
only book loss. Loss not actually sustained.</div>
 
<div style="text-align: justify;">



BOOKING PROFIT: Practically earning
profit by selling the shares whose prices are appreciated. When the prices of
shares which a trader holds go up in price, the trader has made only book
profit. When he actually sells them he practically earns profit.</div>
<div style="text-align: justify;">
 </div>
<div style="text-align: justify;">





BOOM: The continuous movement of share
prices in upward direction.</div>
 
<div style="text-align: justify;">





BOTTOM: Bottom is the lowest price of
a share within a day, week, month, year or any other stipulated time period.</div>
 
<div style="text-align: justify;">





BOTTOM OUT: When share prices hits
their lowest price level and recovers slowly from that level, they are called
as bottomed out.</div>
 
<div style="text-align: justify;">





BOZU: A stock either achieving new
high or falling to a new low in a trading cycle, indicating a bull or bear
dominance.</div>
<div style="text-align: justify;">
 </div>
<div style="text-align: justify;">





BREATH OF THE MARKET: It indicates
the percentage of advancing stocks with that of the declining stocks. If the
total advancing number of stocks is more than the declining number of stocks,
it indicates that the market breath is positive. If the total advancing number
of stocks is less than the declining number of stocks, it indicates that the
market breath is negative.</div>
 
<div style="text-align: justify;">





BULL: A stock market operator, who
keeps buying shares to sell later at much higher price to earn profits
believing that the share prices are going to rise.</div>
 
<div style="text-align: justify;">





BULL MARKET: A continuous upward
movement of share prices sustained by buying pressure of actual investors or
Bulls.</div>
 





BUSINESS DAY: When the stock exchange
is open for trading. It is also called as Trading day. 
 
<div style="text-align: justify;">





BUYING CLIMAX: When a rapid rise in
price of shares has attracted most of the buyers and reaches certain stage
leaving hardly anyone to buy at even higher prices, it is called as Buying
climax. From this stage share prices will fall sharply.</div>
<div style="text-align: justify;">
 </div>
<div style="text-align: justify;">





CHARTISTS: A Technical analyst who
forecasts the future prices of shares by analyzing the price and volume charts
of shares. Chartists believe that share price movements have meaningful patters
which reflects the demand and supply forces of shares to understand the future price
movements of shares.</div>
 
<div style="text-align: justify;">





CIRCUIT BREAKER: A system to check
excessive speculation in the stock market applied by the stock market
authorities when the index rises or falls by more than 5% Trading is suspended
at Circuit Breaker level for some time to let the market cool down.</div>
<div style="text-align: justify;">
 </div>
<div style="text-align: justify;">





CLOSE: The last traded price of a
share transaction on a particular trading session in the Stock Exchange.</div>
<div style="text-align: justify;">
 </div>
<div style="text-align: justify;">





CONTRARILY: A trader who does the
exact opposite of what every one else is doing. He buys shares when every one
is selling and sells shares when everyone is buying. The contrarily believes
that the markets perform the opposite of what the majority of traders think.</div>

 

CORRECTION: A sharp reversal in
downwards direction of the majority of share prices after a bull run. 


CRASH: A share fall in share prices
within a short period of time generally due to panic among traders and
investors due to certain sudden factors. 


DAISY CHAIN: A large quantity of
buying and selling among themselves by a group of Stock Market Manipulators to
give the impression that the share is being largely traded and that the price
is risking. After certain point, the manipulators sell their shares to innocent
investors, who then discover that there is no one to buy from them at high
prices. 

 
DART BOARD INVESTING: The strategy of
investing in roughly selected stocks in the belief that this stocks will also
perform at par or better than carefully selected stocks which is selected
basing on fundamental and technical analysis. This theory became popular when a
group of people in New York in the year 1967, selected a page of stock market
quotations and threw darts at the share prices. They picked all the twenty
eight shares the darts had hit and notionally invested equal amounts in each
share. Fifteen years later their investments had far out-performed the stock
market average of appreciation. 
 
DEAD CAT BOUNCE: A temporary recovery
in share price basing on deceptive factors. 
 
DEFLATION: It is opposite to
inflation. Deflation is a reduction in national income and output, accompanied
by a general fall in prices. During a deflationary period the stock market
usually suffers form Depression. 
 
DELTA STOCKS: The least liquid stocks
in a Stock Exchange. 
 
DEPRESSION: A state of falling
economic activity reflected by falling prices, excess of supply over demand,
low economic activity, increased UN-employment and Deflation. An economic
depression administers shocks to the stock market causing prices to fall
drastically. 
 
DERIVATIVE: A financial instrument
which derives it value from an underlying asset like Stocks, Index,
commodities, Bonds, Currency, Foreign exchange etc., 
 
DISCOUNTING: The stock market
reacting quickly to news or other factors that have an impact on stock market
either directly or indirectly. 
 
DOW JONES OR DOW JONES INDUSTRIAL AVERAGE:
First stock market index in the world comprising of US Blue chip companies. 
 
DRY RUN PORTFOLIO: An imaginary
portfolio maintained by an investor without actually buying and selling of
shares. This dry run portfolio gives experience to an investor to invest wisely
in stock market. 
 
DULL MARKET: A period in which little
buying and selling activity take place in stock market. 
 
FII: Foreign Institutional Investor.
Foreign Institutions or Foreign Financial companies are ow permitted to operate
in the Indian Stock Market. With large amounts of funds their participation
gives strength to the stock markets. 
 
FOLLOW UP SUPPORT: In strong uptrend
of stock prices, the price increases for many reasons. This needs to be
followed up by further purchases in bulk quantities. If this is lacking, the
share price may remain struck at the slightly higher price or it may fall. 
 
FORMULA PLANS: Stock market
investment plans with clear courses of action which overcomes the problems of
timing the buying and selling decisions. 
 
FREE LUNCH THEOREM: The theorem
states that if one wishes to make money in the stock market, one must work hard
and take calculated risks. 

GAP: A gap is noticed when the intra
day high and low price of shares out distance the previous trading day's high
and low. A gap is usually a sign of over bought and over sold market and
indicates a correction. 

 
HAMMERING: Continuous selling of
shares by operators to bring the stock prices down, often short selling heavily
generally done by bears. 
 
HEAVY MARKET: A market with larger
quantities of shares for sale with evry few buyers resulting in falling prices. 
 
HIT THE BID: If Ask price of a share
is higher than the Bid price, the seller of share hits the bid price if he
accepts the lower bid price. 
 
HORIZONTAL PRICE MOVEMENT: The
movement of share price within a narrow range of ups and downs. 
 
IMBALANCE OF ORDERS: Too many people
trying to buy or sell the same share without opposite matching orders to
balance the trades. 
 
INACTIVE SHARES: Shares which are
brought and sold rarely in the stock market. A listed share which is transacted
less than four times a year may be called as inactive shares. 
 
IN-AND-OUT TRADER: A trader who buys
and sells the same share in the course of the trading day to profit from sharp
price movements. 
 
INFLATION: A general and sustained
price increase across the market resulting in the fall of the real value of
money which can buy only less and less. 
 
LIQUIDITY: In Stock market Bid is the
buyer's price. It is this price that you need to know when you have to sell a
stock. Bid is the rate/price at which there is a ready buyer for the stock,
which you intend to sell. The Ask (or offer) is what you need to know when
you're buying i.e this is the rate/price at which there is seller ready to sell
his stock. The seller will sell his stock if he gets the quoted Ask price. 
The difference in the prices of the best bid and ask is called as the Bid-Ask spread
and often is an indicator of liquidity in a stock. The narrower the difference
the more liquid or highly traded is the stock. 
 
LISTED COMPANY: A company which has a
listing agreement with a stock exchange and whose shares are quoted and listed
at the Stock Exchange. 
 
LONG TRADES: In long trades you buy
stocks first wait for some time till the price increases and sell it afterwards
at higher price to make profit. You will have long position if you buy first
and you close your long position by selling stocks which you have purchased. In
long trades you buy stocks expecting that the price will increase and you will
earn profit if the price increases as expected by you. On the other hand if the
price falls you will incur loss on that trade. In long trades you keep you stop
loss below your purchase price. 
 
MARKET FORCES: The forces of demand
and supply which influences the prices of stocks. The imbalance in demand and
supply results in rise and fall of stock prices. 
 
MARKET TIMING: Taking a decision
regarding when to buy or sell a share. 
 
MARKET TONE: Market Tone indicates
the health of the stock market. It is good when the bid and offer prices have a
small gap and the volumes are large. It is bad when there is little trading and
the gap between bid and offer prices is large. 
 
MELT DOWN: Fast and uncontrolled fall
in share prices is referred as melt down. 
 
MIDDLE PRICE: Center price between
Bid Price and Ask price. 
 
MIXED TREND: If there is Bullish
trend for some shares and Bearish trend for other shares, it is called mixed
trend. 
 
MURAT TRADING: Short session trading
on the auspicious day of Diwali. 
 
NARROW MARKET: Inactive market in
which there is low volume of trading and great fluctuations in price compared
to average trading volume. 
 
NASDAQ: National Association of
Securities Dealers Automated Quotation System. NASDAQ was the first screen
based, floor less computer trading system, now the second largest stock market
in the United States. 
 
NERVOUS MARKET: Stock market which is
reacting sharply to sudden news, policy announcements, budget presentation
etc., 
 
NYSE: The New York Stock Exchange. Established in the year 1793, it is the oldest and the largest and the best
known among the stock exchanges in the world. 
 
NIFTY: A select group of fifty shares
of the National Stock Exchange of India 
 
NIKKEI: Index of share prices of
Tokyo Stock Exchange. 
 
OVER BOUGHT: It indicates a sharp
rise in the price of a shares as a result of heavy buying by investors and
speculators in the hope of further rise. If the price of a share reaches this
over bought zone, it is prone to an imminent correction, as profit booking will
take place at this level by the holders of shares. 
 
OVER SOLD: It indicates that the
prices of share has fallen too fast as a result of excessive selling and there
are few sellers left. If the price of a share reaches this over sold zone, the
price will start rising as the low prices attracts buying interest. 
 
PANIC: Heavy selling out of fear. 
 
PEGGING: Stabilizing the price
through intervention by the Government controlled agencies which buy when the
price falls sharply and sell when the price recovers. 
 
PERFECT COMPETITION: A market
condition in which no buyer or seller has the power to influence the price. 
 
PIVOTAL SHARES: Shares of Blue Chip
companies act as pivot on which the market is balanced. If they turn bullish,
the market looks up. If they turn bearish, the market follows. 
 
POOL: A group of speculators, who get
together and use their combined strength o manipulate share prices. 
 
POSITION: An investors stake in a
particular share. Long Position indicates number of shares owned and short
position indicates number of share owed. 
 
PER-MARKET: Trading that takes place
before the official opening of a stock market. 
 
PROFIT BOOKING: Selling shares to
realize profit when their prices have risen above purchase price. 
 
PUNTERS: Speculators who hopes to
make quick profits by buying shares, holding them for short period and selling
them to make quick profit. 
 
QUOTATION: Highest bid price and
lowest ask price of a share. 
 
QUOTE DRIVEN: Electronic stock
exchange in which quotations made by market players determine the prices of
stocks. 
 
QUOTED PRICE: The price at which a
share was last bought and sold on the stock exchange. 
 
QUOTED SHARES: The shares of a
company which are quoted on the official list of the stock exchange. 
 
RALLY: Continuous rise in the price
of a share or in the overall stock market. 
 
RAMPING: Heavy buying of a stock from
the market to increase its demand and price. If the price rises, the ramper
sells his holding and quits from the shares. 
 
RANGE: The high and low of the price
of a stock or the market over a period of time. 
 
REACTION: Temporary reversals and
changes in the market direction. 
 
RECOVERY: Share prices increasing
after a period of fall. 
 
RESISTANCE LEVEL: Resistance defines
that level where sellers are too strong to allow price to rise further. It is a
level at which the rise in the price in the price of a share has repeatedly
halted as there are more sellers at that price than buyers. If the price
manages to move above this resistance level, it gains strength to move to
further higher levels. 
 
RETRACEMENT: The price of share
moving in the opposite direction after sharp rise or sharp fall. 
 
RIGGING: Manipulating the share
prices to attract innocent investors to buy or sell shares. 
 
SCAM: Fraud or cheating committed by
an individual or group for financial gains. 
 
SCRIP: Share certificate. 
 
SHORT TRADES: In short trades you
sell stocks first, wait for some time till the price falls and buy it afterwards
at lower price to make profit. In stock market you can sell stocks without
possessing (having) them. Generally you should sell stocks first and enter into
short trades if you expect that the stocks price will fall from the existing
level. You will have short position if you sell stocks first and you close your
short position by buying the same stocks which you have sold. In short trades
you sell stocks expecting that the price will fall and you will earn profit in
the price falls as expected by you. On the other hand if the price increases
you will incur loss on that trade. In short trades you keep your stock loss
above your selling price. 
In both long trades and short trades, you will earn profit if you sell at
higher price and buy at lower price. In case if your selling price is lower
than buying price you will incur loss in both long trades and short trades. The
only difference between long trades and short trades is, In long trades you buy
stocks first and sell it afterwards and in short trades you sell stocks first
and buy if afterwards. 
 
SLEEPER: A share which has become
inactive for a long time with little investor interest often selling below its
value. 
 
SLUMP: A period at which the prices
and employment are at their lowest, reflected in the downward movement of share
prices. Recovery from a slump is often slow. 
 
SNOW BALLING: A sharply moving price
action activates a number of stop orders, to buy or sell. This puts further
pressure on the rising or falling price activating more stop orders creating
further rise and fall in a snow balling effect. 
 
SOFT MARKET: A market dominated by
selling pressure without any buying interest. Further slight selling pressure
causes the prices to drop further. Soft, because easily depressed. 
 
SPECIFIED SHARES: The most widely and
actively traded shares also know as Group A securities, Cleared Securities
etc., 
 
SPECULATION: An activity in which a
person assumes high risks to achieve large gains. The time span in which the
gain is sought to be made is usually very short. The shorter the term, the more
speculative the investment is. 
 
SPREAD: The difference between
highest Bid price and Lowest Ask price of a share. 
 
STOP LOSS: An exit price level fixed
by a trader to minimize his loss if the trade went against his expectations. 
 
SUPPORT LEVEL: Support level defines
that level where buyers are strong enough tokeep the price from falling
further. It is a point at which the fall in price of a share has stopped since
there is more demand for the stock than supply. If however the share price
falls below this support level, it is expected to fall further. 
 
TAKE A FLIER: Involving in a highly
risky speculation, knowingly. 
 
TAKE OUT: Withdrawing money from a
trading brokerage account, when there is credit balance. 
 
TARGET PRICE: When a trader has
entered into a trade, usually he fixes a price which he expects the share to
reach. This is the target price. In stock market most gains are made by closing
the trades at target price and most losses are result of holding on to a share
hoping that it has an endless possibility of appreciating. 
 
TECHNICAL ANALYSIS: A method of
forecasting the future share price movements based on a study of price and
volume charts and graphs, on the assumption that share price trends are
repetitive, since investor psychology follows a certain pattern, what is seen
to have happened before is likely to be repeated. 
 
TECHNICAL CORRECTION: A small
downward movement of share prices in a rising market, generally as a result of
investors booking their profit because prices have reached either their target
level or major resistance level. 
 
TECHNICAL RALLY: A temporary rise in
stock prices in a falling market, generally as a result of investors buying at
current low prices, or the prices might have reached support levels. 
 
THIN MARKET: Stock market in which
there is a very think volume of trading. 
 
TIGHT MARKET: Actively traded market
with a narrow bid ask spread. 
 
TRADING RANGE: The range within
which, a share has been traded between high and low for quite sometime. 
 
TREND: A short term, medium term or
long term direction of the stock prices in upward, downward or sideways
movement. This shows the direction of the market at that particular time. 
 
TREND LINE: A straight line drawn
connecting the successive higher points or lower points of a share price over a
period in the immediate past. 
 
TWO SIDED MARKET: A market in which
both Bid and Ask prices are firm and both buyer and sellers are assured of
finishing their transactions. 
 
UNDER VALUED SHARES: Shares selling below
their book value or the price earning ration. 
 
UNREALIZED PROFIT: Unrealized profit.
A trader will earn profit only when he sells shares whose prices are
appreciated. Until then he will have only Book Profit. Profits not actually
realized. 
  
UNLISTED SHARE: A share which is not
registered with any stock exchange and therefore does not feature on any stock
exchange list. These shares are very difficult to sell and carry a large risk. 
 
UNLOADING: Selling shares when prices
are sharply falling to avoid further loss. Bulls, when they get tired waiting
for the price, unload when the market is falling, causing prices to fall to
further lower levels. 
 
UPTICK: A transactions data high
price than the preceding one of the same stock. 
 
VOLATILE SHARES: Shares subject to
sharp and violent fluctuations in price, showing a considerable difference
between their highest and lowest recorded prices. 
 
VOLUME: The total number of shares
traded on a particular day or over a particular time. It shows the strength or
weakness of the trend. 
 
WALL STREET JOURNAL: The most
distinguished journal of Finance and investment published five days a week by
Dow Jones and Company in the United States. 
 
WARE HOUSING: Accumulation of shares
in large numbers. 
 
WASH SALE: Buying and selling of a share
in large numbers within a short period of time to generate artificial market
activity and a rise in the share price for fraudulent gains. 
 
WEAK MARKET: A stock market in which
there are more sellers and very few buyers resulting in a decline in stock
prices. 
 
WHIPSAWS: Losing money by buying
stocks just before price falls and selling stocks just before prices rise. 
 
WIDE OPENING: Considerable difference
between the bid price and ask price of a share at the opening of a day's
trading. 
 
YO-YO STOCK: Highly volatile stocks
which go up and down like a YO-YO.  
 
 
More Details- 
<ul>
<li><a href="http://www.moneycontrol.com/glossary/technicals/a.html" target="_blank"> http://www.moneycontrol.com/glossary/technicals/a.html</a></li>
<li><a href="http://Terms and Definitions" target="_blank"> http://economictimes.indiatimes.com/definition/category/Equity</a></li>
<li> <a href="https://www.thinkorswim.com/tos/displayPage.tos?webpage=dictionary&page=a" target="_blank"> https://www.thinkorswim.com/tos/displayPage.tos?webpage=dictionary&page=a</a></li>
</ul>
</div>
</div>

Trading Dictionary 49. Trading Dictionary

Trading Dictionary ACTIVE SHARES: Share in which there are frequent and day to day dealings, as distinguished from partly active sh...