Stocks (Filters) Flashcards
Knowing more about stocks
What is the formulae for Relative Volume (RVOL)?
Relative Volume = Average Volume / Current Volume
RVOL indicates unusually high or low trading activity compared to normal levels.
What does a higher Market Cap indicate?
The higher = the more secure in volatility
Market capitalization reflects the total market value of a company’s outstanding shares.
What does P/E Ratio stand for?
Price Earnings Ratio
It is used for valuation, growth expectation, and comparison.
How is the P/E Ratio calculated?
P/E Ratio = Earnings per Share (EPS) / Market Price per Share
This ratio helps in assessing the valuation of a company.
What does EPS Diluted represent?
Earnings per shares diluted
It accounts for all potential shares that could be outstanding if all dilutive securities were exercised.
What are examples of dilutive securities?
- Stock options
- Warrants
- Convertible bonds
- Other instruments that could increase the total number of shares outstanding
These securities can affect the calculation of diluted EPS.
What is the significance of Dividend Yield?
A higher yield indicates more dividend income per dollar invested
A lower yield suggests either lower payouts or a higher stock price.
How is Dividend Yield calculated?
Dividend Yield (%) = (Annual Dividend per Share / Stock Price) × 100
This formula helps investors assess the income generated from dividends relative to the stock price.
What does Volume refer to in trading?
Volume refers to the number of shares traded during a specific period
It can be analyzed in ascending or descending order for reliability and liquidity.
What is the purpose of analyzing Price Percentage change?
To assess the interval and subcategory of price movements
This analysis can help in understanding market trends.
What does combining performance viewer with sector allow?
It allows comparison on long and short term.
What is the market reaction to news and earnings?
It involves market sentiment, volatility, and potential price movement.
What is the difference between pre-market and after-market volume?
After-market volume is higher due to people revising during the day and making future expectations. Pre-market volume is lower due to fewer active market participants.
Why is after-market volume higher?
People after work are revising the day and making future expectations.
Example: If Apple reports strong earnings at 4:05 PM, its stock may see significant volume between 4:05–8:00 PM as investors reposition.
What does higher risk in pre-market trading imply?
Higher risk equals higher return.
What does valuation show?
It shows the value of the book ratio.
What are dividends?
Dividends are passive income for investors and indicate the financial health of a company.
What does an increase in DPS over time indicate?
It shows financial strength of the company.
Example: NVDA 0.01 DPS / 138.85 stock = 0.007% meaning non-dividend paying stock.
How is profitability shown?
It is shown as a percentage based on gross margin, calculated as Sales - COGS.
What is an example of gross margin and net margin?
AMZN has a gross margin of 48.85% and a net margin of 9.29%.
What are the three main financial statements?
Income statement, Balance sheet, and Cash flow.
What do technicals involve?
They involve historical price movements, volume patterns, and indicators to predict future price trends of a stock.
What are OS Ratings?
They indicate overbought or oversold conditions.
What does the RSI Index measure?
It measures the speed and change of price movements on a scale of 0 to 100.
What does an RSI above 70 indicate?
It indicates that the asset may be overvalued, and a price pullback could be expected.
What does an RSI below 30 indicate?
It indicates that the asset may be undervalued, and a price rebound could be expected.
What does an RSI between 30 and 70 indicate?
It indicates a neutral zone, though traders often look for RSI to reach extremes to signal reversals.
What factors influence markets?
Economic, law, and political systems thinking within the country itself. Taxation can attract the company.
What is the purpose of an index within the market?
Allows you to focus on investment based on your preferences.
What does the pricing of stocks indicate?
Above EMA means bullish, below EMA means bearish. Exponential Moving Average (EMA) gives more weight to recent prices.
EMA crosses: crosses the 20 days.
What is the significance of % change in stocks?
Filtering the stocks on the percentage change.
What is market capitalization?
To buy companies who are small scale vs. large scale.
What does Beta (β) measure?
Beta measures a stock’s volatility compared to the overall market (usually the S&P 500).
Beta = 1 → The stock moves in line with the market. Beta > 1 → The stock is more volatile than the market (e.g., tech stocks). Beta < 1 → The stock is less volatile than the market (e.g., utilities, consumer staples). Beta < 0 → The stock moves opposite to the market (rare, like gold stocks).
