Wealth through conventional investment principles

Glossary of terms

What exactly does the terms mean?

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Glossary - A

No terms defined.

Glossary - B

Bear trend

When supply of shares outstrips demand and prices start to fall. If this trend continues for a number of weeks, the general sentiment becomes bearish and prices continue to fall.

Bull market

A market where the dominating trend is one of rising prices.

Bull trend

When demand for shares outstrips supply and prices start to rise. If this trend continues for a number of weeks, the general sentiment becomes bullish and prices continue to rise.

Glossary - C

Compound Interest

Compound interest arises when interest is added to the principal, so that from that moment on, the interest that had been added also itself earns interest. This addition of interest to the principal is called compounding.

Glossary - D

Day trader

A person whose goal it is to make profits from a security in the shortest possible space of time. Open trading positions may span several days or even weeks.

Glossary - E

No terms defined.

Glossary - F

Fundamental analysis

Fundamental analysis addresses the question of “what shares to buy”. It is concerned primarily with analyzing the future profitability of the company. The fundamental approach examines all the relevant factors affecting the price of a security in order to determine its intrinsic or true value. The intrinsic value is then compared with the market price and rated as being fairly priced, over priced or under priced. This approach is both soundly based and rational.

Futures

A contract that requires the delivery of a commodity at a specific price on a particular date in the future.

Glossary - G

No terms defined.

Glossary - H

Hedge

Taking an investment position in which some investments are designed to offset the risk of others.

Glossary - I

Interest

Interest is a fee, for the privilege of using borrowed money. (If you borrow money, it comes at a cost. That cost is interest. Similarly, you can make investments that pay interest. Your reward for making the investment is the interest you’ll earn).

Interest rate

An interest rate is a percentage of the borrowed money, that the borrower has to pay as interest to the lender, over a period of time (usually a year).

Intraday

Within a single day.

Intraday trader

Someone who trades every day and closes all positions at the end of each day.

Glossary - J

No terms defined.

Glossary - K

No terms defined.

Glossary - L

Liquidity

Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money (in the form of cash) is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid.
(Also, the degree to which an asset or security can be bought or sold in the market without affecting the asset’s price. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold, are known as liquid assets)

Glossary - M

Momentum trading

Short to moderate-length investments that are made to capitalize on the sudden rise or drop in a stock price that follows certain technical indicators.

Glossary - N

No terms defined.

Glossary - O

No terms defined.

Glossary - P

Profit taking

Action by short-term securities traders to cash in on gains created by a sharp market rise. This results in a temporary drop in market prices.

Glossary - Q

No terms defined.

Glossary - R

No terms defined.

Glossary - S

Speculation

Investment of money in hope to gain, but with risk of loss. (Webster Universal Dictionary)

Stop Loss

Investopedia.com defines a stop loss as “an order placed with a broker to sell a security when it reaches a certain price. It’s designed to limit an investor’s loss on a security position.”
(Standard – Trading Warrants and share Installments 11 article from web)

Glossary - T

Technical analysis

Technical analysis serves to determine “when to buy or when to sell” shares. The technical approach acknowledges that fundamentals are important, but assumes that the known fundamentals have already been discounted and reflects in the current market price of a security. Prices are now reacting to a future time horizon of anticipated changes in all variables that will affect the price and prices will lead the conventional wisdom of the moment. Thus, the technical analyst studies the effect of market movements and is unconcerned with the causes. Technical analysis is concerned with the use of graphs and statistical techniques to study historical price and volume patterns in order to predict the future course of share prices. With technical analysis, timing is the critical success factor.
(WEN Professional, Technical Analysis Software Manual)

Glossary - U

No terms defined.

Glossary - V

Volatility

A measure of the variation in a share price over time.

Glossary - W

No terms defined.

Glossary - X

No terms defined.

Glossary - Y

No terms defined.

Glossary - Z

No terms defined.