PS D1: Terminology Flashcards
Define “Buy To Cover”
To close out your position by buying back shares you sold out
What is the aim of “short selling”?
To “sell short” high and “buy to cover” low
What is a “Bid”?
The current highest price somebody is willing to pay for a stock
What is an “Ask”?
The current lowest price somebody is willing to pay for a stock
Define a “Market Order”
Order placed to trade stocks at current market price (Dangerous)
Define a “Limit Order”
Order placed to trade stock at a certain price specified by the client who places the order
What is a “Stop Loss Order”
Order placed to liquidate a position when a specific price is reached or passed, this is used to prevent losses
What is a “Trailing Stop Loss Order”?
A moving stop loss order that adjusts as the stock changes.
What is “Volatility”?
How quick stock prices move
What is “Liquidity”?
How easy it is to trade shares of a stock
What is “Market Valuation”?
Multiply # shares outstanding x stock price
What is “Float”?
of shares publicly owned and available for trading
What are “Restricted Shares”?
Shares bought privately, not tradable
What are “Unrestricted Shares”?
Freely tradable shares
What is a “Microcap”?
Company valued under $250 Mill
What is a “Smallcap”?
Company between
$250M - 1B
What is a “Midcap”?
Company valued between
1B - 10B
What is a “Largecap”?
Company valued over $10B
What is a “Pennystock”?
A stock trade valued under $5/share
What is a “Pump & Dump”?
Promoting a stock in order to sell high
What is an IPO (Initial Public Offering)?
A private companies first sale of stock publicly
What is a “Merger”?
Two companies and stocks combine, usually to cut costs and improve efficiency
What is “Venture Capital”?
Funds that invest in startups with huge growth potential
What is “Margin”?
Using money borrowed from a broker to trade stocks
What is a “Short Squeeze”?
When short sellers try to avoid losses by covering their short positions quickly, which raises stock prices higher
Define “Short Sell”
To sell shares you don’t own, thinking prices are heading lower
