It is very essential to understand stocks investments terms before you get started. It will enable to interpret what the newspapers, your broker, and stock exchanges mean. If you are a fresher to stock market investing, you should know several stock market terms before you make those first trades. Stock market investing is somewhat complex. Study these terms to obtain a fundamental understanding of the stock market, and then start digging deeper. Here are a few of them: Ask price: a term used to show the amount or price in which the sellers of the penny stocks want to sell their shares of stock to the buyers. Balance sheet return: This term stands for the measures of a penny stock company, productivity and company value. The balance sheet return typically contains measures like the book per share, profit margin, return on equity, sales/price ratio, price/book ratio, and the reporting date. Basher: It is someone who posts information on a message board for driving the penny stocks prices down. Bid price: This is the price at which you can sell your stock. Blue Chip Stocks - it describes the stocks owned by firms that are considered secure and less uncertain than other firms. They generally have a large market capitalization. Block trade: In penny stocks lingo, block trade refers to a trade of 100,000 shares or more. Canceled order: This is a buy or sell order that is canceled before it has been executed. A canceled order can also refer to the cancellation of a limit order, or a market order. Capital stock: This is the amount of property contributed by stock holders that are used as the financial foundation for the company. Capital stock may be either common or preferred stock. Current P/E ratio: This refers to the ratio of the current price divided by the last two quarters earnings per share (EPS), plus the next two estimated quarters earnings per share. Day order: A day order is an order that remains open for one trading day until it is executed or canceled. Discount broker: This is a broker who offers low-cost deal fees. The discount broker’s prices are low because he does not offer investment advice. Due diligence: It means undertaking research work before investing in penny stocks Float: This refers to the number of shares a stock has available for trading purposes. Full service broker: This is a broker who offers a full range of investment brokerage services, including financial advice and portfolio management. Fundamental Analysis - analyzing stocks involves examining important financial data of a company which includes financial ratios, profits and revenues, press releases, among others. It is a way to verify which stocks are investing worthy. Limit order: This is an order to buy or sell a stock at a price specified by the customer. If you set a limit order you can specify the maximum price you want to pay for your purchase or the minimum price you will accept to sell your stocks. Market Capitalization - a term used to indicate a corporation's value. It is calculated by multiplying the price per share of the stock and the total number of shares of the corporation. Market Orders - when an investor places an order to buy or sell shares of stock without indicating any desired amount of the stock price. Market maker: This refers to a brokerage or a bank that represents a stock, and competes with other market makers to buy and sell the stocks. The market maker displays buy and sell quotes. Pink Sheets: Pink Quote, informally known as the Pink Sheets, is an electronic quotation system operated by Pink OTC Markets that displays quotes from broker-dealers for many over-the-counter securities. Market makers and other brokers can use Pink Quote to publish their bid and ask quotation prices. The term Pink Sheets is also stands for a market tier within the current Pink Quote system. Pump and dump: This is a penny stocks trading strategy where the prices of the penny stocks usually rise quickly because of hype, and falls drastically when the hype-makers unload their stocks. Spread: This refers to the difference between the bid price and the ask price. Stop limit: This is an order that combines both the stop and the limit order. If you put and activate a stop limit, your order can be executed up to your limit price. If the trading goes beyond your limit ceiling, your trade will not be executed. Stocks: Stocks are shares in a company that are traded on the stock market. Shares are bought at the current sale price and then sold at will in the future for either a profit, loss or at a dead even break. Tanking: Tanking is when penny stocks lose their value very quickly.
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