|
AON,
"all or none"
A
buy or sell order with this designation loses normal order priority if the amount
of shares available doesn't match or exceed the order size. There may be some
specialized circumstances where it could be useful, such as late in the day on
a GTC entry (to avoid a fractional fill such as 100 shares of a 1000 share order,
with resulting doubling of total commissions when the rest of the order fills
the following morning). Ask
Price (sell price) The
quoted ask (offer) at which a market maker is willing to sell a stock. (see Market
Maker, Best Ask)
Bid Price (buy price)
The
quoted bid at which a Market Maker is willing to buy a stock. (See Market Maker,
best bid).
Bid/Ask Spread
The
difference between the price at which a Market Maker is willing to buy a security
(bid), and the price at which the firm is willing to sell it (ask). The spread
narrows or widens according to the supply and demand for the security being traded.
(See inside quote, spread).
Blue-Chip Stock
A
valuable stock that has proven itself; i.e., has been around for many years and
has made piles of money. Examples are IBM, GE, Ford, etc. The name derives from
the chips used in poker, blue always being the most valuable.
Bottom Fishing
Purchasing
of stock declining in value, or of stocks that have suffered drastic declines
in their prices.
Broker
The
term was first used around 1622 to mean an agent in financial transactions. Originally,
it referred to wine retailers - those who broach (break) wine casks.
Call Money Rate
Also
called the broker loan rate. This is the interest rate that banks charge brokers
to finance margin loans to investors. The broker charges the investor the call
money rate plus a service charge. Investors who buy on margin will pay this rate.
Churning
See
excessive trading.
D.A.R.T. (acronym)
Direct
Access Real Time
Day Order
Order
to buy/sell securities at a certain price that expires if not executed on the
day it is placed.
Diluted Shares
A
way of characterizing the number of outstanding shares that a publically held
company could have. The diluted shares measure is the sum of the company's normally
outstanding shares, the shares that would be outstanding if every warrant &
stock option were exercised, and the shares that would be outstanding if every
security convertible into the stock (e.g., certain preferred shares) were converted.
This is sometimes used when computing earnings per share numbers. A larger number
of outstanding shares means lower earnings per share, rather obviously; this is
known as "dilution of earnings" or computation of "fully diluted"
earnings.
Direct Access
The
ability to place a trade electronically with any participating exchange, ECN or
Market Maker without intervention.
DNR, "do not reduce"
This
is usually assumed unless you specify otherwise, but different brokers may have
different practices and some may require you to specify DNR if you want it. What
it deals with is how the order is to be/not adjusted when dividends or other distributions
occur. For example a $1/share dividend on a stock for which you have entered an
order DNR brings the price closer to your bid or takes it further away from your
offer. Without the DNR specification, on the ex-dividend date your order price
is reduced by the amount of the distribution.
Downtick
Downtick
means the next trade is at a lower price than the previous trade. See uptick.
ECN
See
electronic communication network (ECN).
EDGAR
Electronic
Data Gathering, Analysis, and Retrieval (EDGAR)-An electronic system developed
by the Securities and Exchange Commission. EDGAR permits companies to file electronically
with the SEC all documents required for securities offerings and ongoing disclosure
obligations. EDGAR became fully operational mid-1995. (See Securities and Exchange
Commission).
Electronic Communication Network
(ECN)
Any
electronic system that widely disseminates to third parties orders entered by
an exchange Market Maker or OTC Market Maker, and permits such orders to be executed
against a whole or in a part. (See Market Maker).
Elves Index
Louis
Rukeyser's index of the opinions on the general stock market for the next 6 months.
He polls 10 analysts, the same ones every week, to ask what they think the general
trend will be, namely bullish (+1), neutral (0), or bearish (-1). The index range
is -10 to +10.
Excessive Trading
A
broker excessively trades an account for the purpose of increasing his or her
commissions, rather than to further the customer's investment goals.
Filling the Gap
Due
to developments after market close and overnight, a stock price can change by
a greater degree than usually happens throughout a trading day. This creates a
gap that, once trading resumes the following morning, gradually diminishes with
normal market activity, returning the stock to its level from the previous day.
The adjustment is called filling the gap.
FOK, "fill or kill"
This
means do it now if the stock is available in the crowd or from the specialist,
otherwise kill the order altogether. I never have found a situation to make use
of that designation.
Going Long
Buying
and holding stock.
Going Short
Selling
stock short, i.e., borrowing and selling stock you do not own with the intention
of buying it later for less.
GTC, "good till cancelled"
Order
to buy/sell securities at a certain price (a limit order); the limit order stays
in the market until you call specifically to cancel it. Some brokers restrict
the length of time a GTC can remain open to "end of same month", "no
more than 30 days" or some such thing, but with most it becomes a permanent
part of the book until it gets executed or you cancel.
Individual Investor
A
person who buys or sells securities for his or her own account. The individual
investor is also called a retail investor or retail shareholder.
INSTINET
See
The Institutional Networks Corporation.
Institutional Investor
A
bank, mutual fund pension fund, or other corporate entity that trades securities
in large volumes. (See also buy-side trader, fourth market, and qualified institutional
investor).
Institutional Networks Corporation (INSTINET)
A
computerized service that allows subscribed to display tentative bid and ask quotes.
INSTINET registered as a stock exchange with the Securities and Exchange Commission;
it supports the "fourth market". (See fourth market, SelectNet).
Market Maker
A
firm that maintains a firm bid and offer a price in a given security by standing
ready to buy or sell at publicly-quoted prices. The NASDAQ Stock Market is decentralized
network of competitive Market Makers. Market Makers process orders for their own
customers and for other NASD broker/dealers; all NASD securities are traded through
Market Maker firms. Market Makers also will buy securities from issuers for resale
to customers or other broker/dealers. About 10 percent of NASD firms are Market
Makers; a broker/dealer may become a Market Maker if the firm meets capitalization
standards set down by NASD.
Market Maker Spread
The
difference between the price at which a Market Maker is willing to buy a security
and the price at which the firm is willing to see it. (See inside market).
MIT, "market if touched"
Frequently
used in the commodity futures pits. I seem to recall it being available on exchange-traded
stocks as well, but I've never been such a hotshot as to use the designation *as
such*. Instead, when I see serious overhead resistance at some point and have
sufficient reason to want to unwind my position, I'll respond with a limit order
below the resistance to close out my position. Similarly, when I see serious support
and want to get into a position, I'll respond with a limit order above the support
to gain entry. What I don't want to be doing is chasing the stock wildly (what
market orders tend to do) just because some specific price got touched.
MKT, "at the market"
It
doesn't matter how much you have to pay to buy nor how little you get on a sale,
just do it now.
NASD
See
National Association of Securities Dealers, Inc.
NASDAQ
The
National Association of Securities Dealers Automated Quotation system. (See National
Association of Securities Dealers, Inc.).
Order Flow
Aggregated
small orders to purchase or sell securities that brokers send to dealers often
in return for cash payments.
Order Matching
The
Market Maker practice of pairing buy and sell orders for like amounts of securities
at identical prices. (See Market Maker, Small Order Execution System)
Order Ticket
A
form completed by a registered representative of a brokerage firm upon receiving
order instructions from a customer.
Overbought [oversold]
Judgmental
adjective describing a market or stock implying That people have been wildly buying
[selling] it and that there is very little chance of it moving upward [downward]
in the near term. Usually it applies to movement momentum rather than what the
security should cost.
Over Valued, Under Valued, Fairly Valued
Judgmental
adjectives describing that a market or stock is over/under/fairly priced with
respect to what people believe the security is really worth.
Real Time
The
electronic delivery of live quotes, charts, sales, trades and news data with no
delay.
Securities Analyst
An
individual who does investment research and make recommendations to buy, sell,
or hold Most analysts specialize in a single industry or business sector.
Securities And Exchange Commission (SEC)
The
federal agency created by the Securities Exchange Act of 1934 to administer that
act and the Securities Act of 1933. The statues administered by the SEC are designed
to promote full public disclosure and protect the investing public against fraudulent
and manipulative practices in the securities markets. Generally, most issues of
securities offered interstate commerce or through the mails must be registered
with the SEC. (See Maloney Act, Securities Act Amendments of 1975, Securities
Exchange Act of 1934).
Short Sale
The
sale of shares of a security that the seller does not own. Such sales are made
in anticipation of a decline in the price of the security to enable the seller
to cover the sale with a purchase at a later date, at a lower price, and thus
at a profit. Securities and Exchange Commission rules allow investors to sell
short only when a stock price is moving upward. This prevents "pool operators"
from driving down a stock price through heavy short selling, then buying the shares
for a large profit.
Small Order Execution System
Automated
execution system for processing small order agency executions of NASDAQ securities
(up to 1,000 shares).
Specialist
A
member of a stock exchange through which all trades in a given security pass.
Spread
The
difference between the bid price at which a Market Maker will buy a security,
and the ask price at which a Market maker will sell a security.
Tender
Tender
(v), to provide, to offer for delivery. Frequently used as a short version of
"tender offer," which is a public invitation extended to shareholders
of a company by an organization that wishes to buy the company (i.e., a bid to
take control of the company). Following a tender offer, shareholders who have
accepted the offer surrender ("tender") their shares in exchange for
payment.
Treasury shares
Shares
taken from the company treasury (not the US Treasury!). Often occurs in the context
of discussions about how companies fulfill share purchases within DRIP accounts.
Uptic
Uptick
means the next trade is at a higher price than the previous trade. Meaningful
for the NYSE and AMEX; not so meaningful for OTC markets (NASDAQ). Certain transactions
can only be executed on an uptick (e.g., shorting).
Volatility
The
degree of price fluctuation for a given asset, rates, or index. Usually expressed
as a variance or standard deviation.
Volume
Amount
of trading activity, expressed in shares or dollars, experienced by single security
or the Entire market within a specified period, usually daily, monthly, or annually. | 
