Advance-Decline Measures the number of stocks that have advanced and the number that have declined over a particular period. The ratio of one to the other is considered an indicator of the general direction of the stock market. Where it is rising it shows that a greater number of securities are increasing in price relative to the number declining. Arbitrage The simultaneous purchase and sale of the same or substantially equal securities in such a way as to take advantage of the price differences prevailing in separate markets. Asked Price Price at which a stock is offered for sale. Basket Trading A group of stocks such as all the issues in the S&P 100 that are traded simultaneously Beta Coefficient measuring a stock’s relative volatility. The Standard & Poor’s Stock Index has a beta coefficient of 1. Any stock with a higher beta is more volatile than the market, and any with a lower beta can be expected to rise and fall more slowly than the market. Bid and Offer Bid is the highest price a prospective buyer is willing to pay for a given security; offer is the lowest price acceptable to a prospective seller of the same security. Block A large amount of securities, generally a minimum of either 10,000 shares or $200,000. Breakout In technical analysis, the rise through a resistance level or the decline through a support level by the market price of a security Circuit Breakers A complex series of rules adopted by securities and futures markets after the 1987 market break in an attempt to temper the speed of a significant market setback. Cross A agency transaction where the same broker represents both buyer and seller. Delayed Opening Postponement of the start of trading in a stock until an imbalance in buy and sell orders can be traded while minimizing stock price impact. Dividend Rollover Method of buying and selling stocks around their ex-dividend dates so as to collect the dividend and make a small profit on the trade. After the ex-dividend date, the price will drop by the amount of the dividend. Downtick Sale of a security at a price below that of the preceding sale. Fundamental Analysis A method for analyzing the prospects of a company through the observation of accepted accounting measures such as earning, sales, product development, management expertise, etc. Hedging Strategy used to offset investment risk. A perfect hedge is one eliminating the possibility of future gain or loss. Short selling and options trading are widely used hedging techniques. Historical Trading Range Price range within which a stock has traded. Index Statistical composite that measures changes in the economy in financial markets, often expressed in percentage changes from a base year or from the previous month. Indicator Technical measurement that securities market analysts use to forecast the market’s direction, such as investment advisory sentiment, volume of stock trading, direction of interest rates, and buying or selling by corporate insiders. Institutional Investor Mutual funds, banks, insurance companies, pension funds, corporate profit-sharing plans and college endowment funds are considered to be institutional investors Limit Order Order to buy or sell a security at a specific price or better. Liquidity The ability of the market in a particular security to absorb a reasonable amount of trading at reasonable price changes. Liquidity is one of the most important characteristics of a good market. Moving Average Average of security prices constructed on a period as short as a few days or as long several years and shoeing trends for the latest interval. Momentum Rate of acceleration of a price or volume movement. Technical analysts study stock momentum by charting price and volume trends. Plus Tick Expression used when a security has been traded at a higher price than the previous transaction in that security. Profit Taking A drop-off in price after a sharp increase in the absence of any adverse economic influence. Traders are assumed to be taking short-term profits. Program Trading Computer driven buying or selling of baskets of 15 or more stocks by index arbitrageurs of institutional traders. "Program" refers to computer programs that constantly monitor stock, futures, and options markets, giving buy and sell signals when opportunities for arbitrage profits occur or when market conditions warrant portfolio accumulation or liquidation in the markets. Quotations Highest bid and lowest offer (asked) price currently available on a security. Resistance Level Price ceiling at which technical analysts expect selling pressure to overcome buying interest. Technical analysts think it significant when the stock breaks through the resistance level because that means it usually will go to higher prices. Selling Short Sale of security contract not owned by the seller; a technique used to take advantage of anticipated decline in the price or to protect a profit in a long position. Short Interest Total amount of shares of stock that have been sold short. A high short interest indicates that more people are expecting a downturn. Such short interest, also represents potential buying pressure, however, since all short sales must eventually be covered by the purchase of shares. Short Position Stock shares that an individual has sold short ( by delivery of borrowed certificates) and has not covered of a particular date. Short Sale Rule SEC rule requiring that short sales be made only a plus tick. A short sale can be transacted only under the following conditions-1) if the last sale was or is at a higher price that the sale preceding it: 2) if the last sale price is unchanged but higher than the last preceding different sale. Short Selling Against The Box Selling short stock actually owned by the seller but held in safekeeping, called the "Box" in Wall Street jargon. The main motive has been to protect a capital gain in the shares that are owned, while deferring a long-term gain into another tax year. Specialist Book Record maintained by a specialist that includes all active orders. Support Level Price level at which a security tends t stop falling because there is more demand than supply. Technical analysts identify support levels as prices at which a particular security or market has bottomed in the past. Spread The difference between the bid and offer (asked) price. Technical Analysis An effort to forecast prices , rates, or returns in financial markets largely by analyzing data internal to the market, such as price or volume numbers. Trading Halt A temporary suspension of trading in a security in advance of a major news announcement. Triple Witch The third Friday of the month of each quarter (March, June, September, December) when equity options, index options, and index options futures contracts expire, often leading to greater trading activity or volatility. Volatility Mathematical measurement of how much and how quickly a security moves within a specific period of time. Zero Plus Tick Sale that takes place at the same price as the previous sale, but at a higher price than the last different price. Zero Minus Tick Sale that takes place at the same price as the previous sale, but at a lower price than the last different price.
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