Saturday 31 August 2013

STOCK TERMINOLOGIES AND BASIC CHART READING

Please feel free to advise me at the end of this article if you feel I've missed an important one.

After-Hours Trading –Any trading done before and after the major stock exchanges are closed. In the United States, major stock exchanges open from 9:30 am ET to 4:00 pm ET

Market volume – It is the amount of stocks of a company traded over any period of time.

Market capitalization – It is the total value of a company determined by stock market.

Market capitalization = current stock price * No of outstanding shares.





























Day range – lowest and highest price of a stock in a day 

52 weeks high and low- highest and lowest price paid for the stock during the past year.

Stock - The name of the company name, every stock has a symbol.





Div: dividend. For each share, shareholders receive at least $1.76 from company's annual profit. It is a portion of profit paid to stockholders. Dividends could be cash or stock paid to investors. It is the profit split between all of the company’s shareholders and more shares you own more dividends you get. And it is paid out every 4 months (quarterly)

P/E - Price/earnings ratio for the last year.It is a good indicator of a stock strength as lower the PE ratio,the higher the earnings.
Yld% or yield (rate of return) = annual dividend/current price of stock
Sales 100s: Total amount of stock traded during the previous day.

Bear Market – It is a period of time when most stock are declining in value.

EPS: Earnings per Share or net consolidated earnings divided by the number of shares. EPS lets you know which earnings have been distributed to shareholders.

CA: corporate actions like take-over bid, a public exchange offer or a capital increase that could impact share values

Asks Price – It is the price that the buyer asks to pay to buy a stock. In general ask price is slightly higher than the current value of a stock. Let’s say 26 for 25.5 valued stock

Bid Price – The price that is offered by a buyer. When both bid price and ask price are met up than the transaction occurs for desired number of shares.

Bull Market – It is a period of time when most stock are increasing in value.

Call Option – It is a buyer and seller agreement to make the trading on specific date, at fixed price per share with certain fee paid to seller. The seller cannot back out the deal if the buyer intends to buy as per agreement.


Commission – The fees paid to a stock broker for your order execution. The fee varies according to different company.

Daily Volume – Total amount of shared traded in a daily basis.Each stock has its own daily volume chart and it shows how active or passive they are in the market.

Discount Broker – A discounted broker is the one who facilitates trades and offers trading for a discounted price.

Fiscal Year – It is a 12 month accounting period designated by a company and it can begin anytime in a year but once it begins,it can’t be changed.
Stock index –It is a specific group of stocks.It is a method of measuring the value of a section of the stock market.It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors , financial managers and reporters to describe the market, and to compare the return on specific investments.
Limit Order – When buyers and sellers don’t wish to make a real time trade they both can give limit orders to each other.Buyers place a limit order when stock price drops to a certain buy/low point and similarly seller place a limit when stock price rises to a certain sell high point.
Margin – Buying a stock on margin simply means borrowing money from brokers to buy a stock.Investors take advantage of this opportunity when they don’t have cash to make an immediate good deal.
Market Order – It is an order that executes immediately at the current price of stock.
Put Option – Here the seller gets the power of trade but have to pay premium fee for this option and if buyer and seller agree on a put option than the seller has the right to sell his stock anytime to the buyer before the expiration date occurs.
Portfolio – A portfolio is simply a collection of all your investments.If you own 4 stocks A,B,C,D then your portfolio would have A,B,C,D stocks.
                                                                                                                                                         


Some Investing terms 

Preferred Stock – Preferred stock is the result of negotiation that takes place between investors and company.It holds higher value to investors than common stock because dividends are paid out first and sometimes at a higher rate.The owners of preferred stock have no voting rights within the company but owners of common stock have.
Quote – It is the current price of the stock and some websites give it in real time while others with a time delay of around 10-15 minutes.
Short Sale – It is the sale for a short period time where investors can sell others stock for a short time in the hope that it declines. The profit or risk bearer is the investor in this case because either on stock price increase or decrease the investor have to buy it back.



Ticker Symbol – It is a unique abbreviation of a company in a stock exchange and contains usually 1 to 5 characters. A tickler symbol is unique representation of a company and is publicly traded in a stock exchange.    

Stock Index

Stock index is a specific group of stocks.It is a method of measuring the value of a section of the stock market.It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors , financial managers and reporters to describe the market, and to compare the return on specific investments.

            










Share Performance :If your are achieving your investment goals then you can say your shares are going well.
But,Share's performance continue to vary within the market sector from one period of time to another.

To measure the investment performance,share market indices are the benchmark of measurement.Indices provides an indication of share price movement for particular industry groups.








 Basic stock chart reading 1                                                                                                    





Basic stock chart reading 2                                                                                                    





HOW STOCK PRICE GOES UP AND DOWN?

A company only issues limited number of shares.The individual stock price goes up and down according to supply and demand.



More people want to buy the stock,they ready to pay high and the price goes up.As the supply of shares of any stock is limited,when the price goes very high and buyers not ready to pay that price,the stock price starts to drop.



So,for a limited stock,more demand means price goes up and less demand means price goes down.


                Stock Market : How Is the Price of a Stock Determined?


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