Stock Market Terms - Saying It The Right Way
When preparing for an interview, a prospective employee will usually do some research on a company and its products. If the prospective employee has never worked in the particular field, he or she might try to learn some of the buzzwords related to the business. Knowing some of the terminology can help even the beginning trader successfully discuss investment philosophies as well. Below are some of the stock market terms that will help you when speaking with someone else in the business:
Basic terms These stock market terms reflect common ideas and descriptions that are used every day. Such stock market terms portray types of people and general stock market basics.
- Ask This is the lowest price that a seller will accept when selling a stock.
- Bear This refers to an investor who believes the stock market or a particular stock is declining. This is the opposite of a Bull.
- Bid This is the highest price that a buyer is willing to pay for a stock.
- Broker A person that buys or sells stocks, bonds, commodities and such in exchange for a fee which is called a commission.
- Bull An investor who believes the whole market or one individual stock is going to increase in price. This is the opposite of a Bear.
- Dow Jones Industrial Average This is a compilation of the 30 most traded blue chip stocks. This list is the most widely used for analyzing stock market indexes.
- NASDAQ This is a stock exchange consisting primarily of technology companies.
- Stock This is the smallest measurable unit of ownership in a company. Shares fall into either the common or preferred categories; companies issue shares of stock in order to raise capital without borrowing money.
Investing terms These words and phrases reflect stock market terms for various stock market strategies. These stock market terms are used to describe specific conditions or analysis.
- Blue Chip This term describes a company with a history of strong earning, traditionally increasing dividends and an outstanding balance sheet. Blue Chip stocks include Exxon-Mobile, Coca-Cola and Wal-Mart.
- Book Value - This is the value of a company if assets and common stock equity are added together and all liabilities are subtracted. There is little correlation between the book value and the market value. Book value is used in such fundamental analysis measurements as Price to Book ratio.
- Dividend This is the portion of a companys profit that is given back to the investors. Such payments are made on either an annual or quarterly basis.
- Market Capitalization A company's market capitalization, also known as its market cap, is calculated by taking the number of outstanding shares of stock multiplied by the current price per share.
- P/E Ratio This widely used analysis tool of Price to Earnings ratio measures now you pay for each dollar of corporate earnings. For example, if you have $30 stocks that report a profit of $2 per share, your P/E ratio is 15; $30 per share divided by $2 earnings per share equals 15. In this ratio the lower the P/E ratio, the better.
- Spread: This stock market term reflects the difference between the Ask and the Bid.
- Yield This is the percentage of a dividend paid against the stock price. For example, if you receive a $3 dividend on a $30 per share stock, your yield is 10%.
Conclusion
It is much easier to discuss the stock market if you understand some the basics of stock market investing and the basic stock market terms. There is a large variety of stock market terms and learning them will not only help in your conversations but also to better comprehend the stock market trading tools available for stock technical analysis.
Market Direction: What does a candlestick 'buy' signal imply? Very simple, it is the evidence of investor sentiment creating a positive trend potential. Why ask such a simple rhetorical question? To illustrate a very simple phenomenon. The appearance of a candlestick buy signal produces a result that is much better seen during the sloppy trading days. For example, the Dow traded off 50 points today. The NASDAQ closed just slightly higher on the day. Even on a sluggish trading day, if investor sentiment is illustrated correctly through candlestick signals, the majority of the strong candlestick 'buy' charts should have acted decently and at worst not sold off very hard. An investor's confidence will improve as they experience positive results from individual chart patterns when the rest of the market isn't performing well.
With the simple scanning techniques for finding the best possible trades, out of a total universe of almost 10,000 stocks, the candlestick investor will usually be working with the universe of less than 20 stocks at a time. This becomes the result of strong candlestick reversal signals as well as the formation of patterns. Today was a strong illustration that the information incorporated into candlestick signals and patterns have a high probability of producing expected results. In previous newsletters, the Fry Pan Bottom was being demonstrated in the PNTR chart. An upside breakout was expected. On a day when the markets in general did not show any great resilience, PNTR was up 12.7%.
PNTR
WIRE is also a stock that has been followed recently because of the strong candlestick buy signal, the belthold signal. The belthold signal represents a trend probability that will show good upside movement. Nothing had deterred that evaluation ever since the appearance of the belthold signal. It moved up 10 1/2 percent today.
WIRE
Our recommendation from yesterday, MDTL, broke out nicely through the 50 day moving average today and was up 12.5%. What is the point of these illustrations? This is not a Jim Cramer bragging session, pointing out the great results of the good picks while forgetting to mention the bad ones.
MDTL
This is simply to illustrate the results of candlestick signals. The information conveyed in the signals creates the probabilities of being in positions that have the potential for big price moves. These three positions were in the top 10 stocks for price percent moves in our trading universe of 1750 stocks. The point to be made here is that to have three stocks out of the 20 or so stocks that are either recommended on the site or actively discussed in the chat room to be in the top 10 price percent movers for the day is not a quirk. The candlestick signals present the opportunities to be in the right places at the right time.
And what happened to the other 17 positions? The majority of them had a decent day. OVTI recommended this morning was up 2.26% today. GROW was mentioned yesterday as a buy in the latter part of the day, it was up 2.2%. The majority of the recommended or discussed positions traded positive . The few that were slightly down did not alter their uptrend scenario. The information portrayed in candlestick signals and patterns creates the opportunities to be in the right positions at the right time. The overall affect for a portfolio is consistent positive returns. This is not a difficult investment program. Utilizing the common sense elements illustrated in candlestick patterns provides a much better probability of producing positive overall returns in a portfolio
Chat session - There will be a chat session tonight at 8 p.m. ET. Short-term traders - Next Tuesday night, Ricky Wayne will be presenting some techniques on his "hit-and-run" candlestick trading program. These techniques have produced a very profitable and enjoyable lifestyle for Ricky Wayne. If you are interested in how to make profits with powerful day trading for swing trading techniques, do not miss next Thursday night. Click here for stock chat instructions.
April training session - Meet other investors that are producing good profits in their trading accounts using candlestick techniques. April 14 and 15th, Houston, Texas, gain valuable insights into how candlestick signals and patterns dramatically improve your investment abilities. These are simple, easy to learn investment training procedures. Ricky Wayne will also be presenting his day trading techniques. You will come away from this weekend with dramatic improvements in your investing abilities. Many investors pay for the training within days of putting on positions. Do not miss this opportunity to obtain knowledge that will improve your investment perspective for the rest of your life.
Good investing,
The Candlestick Forum Team
Candlestick Analysis Technician - Level 1
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