Stock Vocabulary #1

Question 1

Ex-Div Date

Answer 1

The date when you must own a stock in order to receive a dividend. If you own a stock on this date, but sell it before the dividend is paid out, you will still be paid the dividend.

Question 2

Limit Order

Answer 2

An order that is sent to the market to maximize gains based on the price set.
a direction given to a broker to buy or sell a security or commodity at a specified price or better.

Question 3

Limit Buy

Answer 3

A “buy” order sent to market, with a “limit price” set below the current market price. If the market price falls below the “limit price”, the order converts to a market order and executes.

Question 4

Market Order

Answer 4

An order that is sent to the stock market with the instructions “buy this stock now at the current ask price”.

Question 5

Limit Buy

Answer 5

A “buy” order sent to market, with a “limit price” set below the current market price. If the market price falls below the “limit price”, the order converts to a market order and executes.

Question 6

Limit Sell

Answer 6

a “Sell” order sent to the market, with a “limit price” set above the current market price. If the market price rises above the “limit price”, the order converts to a market order and executes.

Question 7

Stop Order

Answer 7

An order that is sent to the market to protect against loss.

Question 8

Stop Buy

Answer 8

A “Buy” order set above the current market price. If the market price rises above the “Stop Price”, the order converts to a market order and executes.

Question 9

Stop Sell

Answer 9

A “Sell” order set below the current market price. If the market price falls below the “Stop Price”, the order converts to a market order and executes.

Question 10

Trailing Stop Order

Answer 10

A type of stop order that has the “stop” set as a dollar amount or percentage above (for a buy) or below (for a sell) the market price. If the market price moves farther away from the trailing stop, the trailing stop automatically adjusts to match it.

Question 11

Order Term

Answer 11

How long an order is valid when sent to market.

Question 12

Margin Trading

Answer 12

The act of borrowing money from your brokerage to buy additional investments. The amount borrowed is charged interest.

Question 13

Short

Answer 13

The act of borrowing shares of a stock from your brokerage, and immediately selling them. At a later date, the investor buys back the shares at market price and returns them to their brokerage. If the stock’s price fell during that time, they earn a profit.

Question 14

Cover

Answer 14

The act of buying back a “shorted” stock and returning it to your broker.

Question 15

Unrealized Gains (Losses)

Answer 15

The increase (decrease) in value of stocks that you currently own.

Question 16

Realized Gains (Losses)

Answer 16

The increase (decrease) in value of stocks that you have sold, from when you bought them until you sold them. This would be your cash profit from trading.

Question 17

First In, First Out (FIFO)

Answer 17

An accounting method that considers the price of your oldest stocks when selling to calculate the realized gain or loss.

Question 18

Last In, First Out (LIFO)

Answer 18

An accounting method that considers the price of your newest stocks when selling to calculate the realized gain or loss.

Question 19

Average Cost Basis

Answer 19

An accounting method that considers the average purchase price of your stocks when selling to calculate the realized gain or loss.