Day trading terms and definitions
Learn these terms before you begin reading about indicators and chart patterns. To fully get to grips with learning the stock market, you first need to understand all the different terminology that is often used. Use our stock market terminology page as a guide that you can consult for a glossary of terms and lingo that will help you understand the markets better. If the terminology page still doesn't help with a query or problem that you have then please feel free to contact us for help you're stock market education is important to us.
Measures the net difference between advancing issues and declining issues and adds it to previous results. This gives an accumulative value which is then plotted on a chart. Price breaks support and creates sell signals. The price then rallies and cancels the sell signal thereby catching all the short sellers on the wrong side. A call option gives the owner the right, but not the obligation, to buy a security at a predetermined price within a specific time.
A call option is bought for leverage or for limiting your risk. A very old form of Japanese charting. Used for the prediction of the direction of the next move. When a trendline on an indicator points in opposite direction then trendline is on price.
Often seen when price makes a higher high and indicator makes a lower high the trendline above the price will point up and the trendline on the indicator will point down. The higher price the stocks have, the bigger influence it has on the index.
A strategy developed by Ralph Nelson Elliot which is based on wave counting. He believed price moves in repetitive waves. A gap that is filled and price then continues in the opposite direction of the gap resulting in a reversal of the trend prior to the gap. A set of rules that helps the trader narrow down the amount of trades and only focus on those believe to be quality trades. An order that stays open till either filled or cancelled however there is a time limit of 90 days. An order that stays open until either filled or until the specified date where it will automatically be cancelled.
A way to protect your investment. Done by making a transaction that offsets the existing investment. A fund which invests in any available instrument but more aggressively than a mutual fund as the hedge fund is exempt from many rules so it can both short sell, use leverage etc.
A mathematical formula used to predict the direction of a security. Often a derivative of price, but also of volume. Non-public information in a business that could move price of a stock, should that information made public. Anyone in a company who are presumed to have the opportunity to gather inside information concerning that company. A company or a person's debt. Limit Order An order to enter a position at a set price or better.
Market Order An order to enter a position at the next available price. Mini Refers to a futures contract that has a smaller contract size than an otherwise identical futures contract. Options Options are a contract that give the buyer the right, not the obligation to buy or sell the underlying security at a specified price Strike Price at a specified date. Stock Index An average of a basket of stocks, that are usually weighted, meaning some stocks have more "juice" in the index price than others.
Some examples of stock indexes are: Swing Trading Opposite of daytrading. Swing Traders speculate longer term on prices of stocks, futures, etc. Tick The minimum price fluctuation price action can make. Important Notice - Risk Disclaimer: This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in trading FUTURES, but you should particularly note the following: Under margin trading conditions even small market movements may have great impact on the customer's trading account.
You must consider that if the market moves against you, you may sustain a total loss greater than the funds deposited. The issuer must disclose its activities, plans, management and finances in the application. Long A term that refers to ownership of securities. Low Price The lowest price at which a board lot trade was executed during a period of time. Mm Margin Account A client account that uses credit from the investment dealer to buy a security.
A client needs to deposit a margin amount with the balance advanced by the investment dealer against collateral such as investments. The investment dealer can make a margin call, which means the client must deposit more money or securities if the value of the account falls below a certain level.
If the client does not meet the margin call, the dealer can sell the securities in the margin account at a possible loss to cover the balance owed. The investment dealer also charges the client interest on the money borrowed to buy the securities. Market The place where buyers and sellers meet to exchange goods and services.
It also represents the actual or potential demand for a product or service. Market Capitalization The number of issued and outstanding securities listed for trading for an individual issue multiplied by the board lot trading price. Should a trading price not be available, a bid price, a price on another market, or if applicable, the price for an issue of the same issuer which the first issue is convertible into, may be used.
Total market capitalization for a market is obtained by adding together all individual issue market capitalizations warrants and rights excluded. Escrowed shares are excluded from TSX Venture market capitalization. Market Maker A trader employed by a securities firm who is required to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill.
Market makers for the stock of issuers listed on Toronto Stock Exchange are referred to as Registered Traders. MOC accepts confidential market orders from before the open and throughout the trading session, maintaining them in time priority. Twenty minutes before the close of the trading session, MOC publicly broadcasts an imbalance of buy and sell MOC market orders and asks for limit MOC orders to offset the imbalance. Ten minutes before the close of the trading session, MOC publicly broadcasts an Indicative Calculated Closing Price ICCP that provides market participants with an indication of what the calculated closing price would be assuming the regular trading session had ended at that time see Indicative Calculated Closing Price for more details.
At the close, MOC matches orders, from the MOC and continuous market books, at a calculated closing price which assures the most matches closest to the last sale price , and allocates the fills according to price and time priority.
Market Order An order to buy or sell stock immediately at the best current price. This information product shows the committed, tradable volume of the top 5 bids and asks for each Toronto Stock Exchange or TSX Venture Exchange-listed stock. Material Change A change in an issuer's affairs that could have a significant effect on the market value of its securities, such as a change in the nature of the business or control of the issuer. Under the principle of continuous disclosure, a listed issuer must issue a news release and report to the applicable self-regulatory organization as soon as a material change occurs.
Minimum Fill Order A special term order with a minimum fill condition will only begin to trade if its first fill has the required minimum number of shares.
For example, an order to buy 5, shares with a minimum volume of 2, shares can only trade if 2, or more shares become available. A Registered Trader will provide the stock should the book be below the required limit.
To be eligible for MGF, an order has to be a tradable client order with a volume less than or equal to the MGF size, which varies from stock to stock. Minimum Price Fluctuation The minimum price change or tick on a futures contract. Mixed Lot or Broken Lot An order with a volume that combines any number of board lots and an odd lot. Money Market Part of the capital market established to buy and sell short-term financial obligations. These include federal government treasury bills, short-term Government of Canada bonds, commercial paper, bankers' acceptances and guaranteed investment certificates.
Longer-term securities are also traded in the money market when their term shortens to three years. It is intended to reduce costly duplication of disclosure requirements and other filings when issuers from one country register securities offerings in the other.
Under the rules, eligible cross-border offerings are governed by the disclosure requirements of the issuer's home country. These orders are guaranteed a complete fill at the opening price to offset expiring options.
They must be ordered between 4: Mutual Fund A fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.
Nn Naked Writer A seller of an option contract who does not own a position in the underlying security. Net Change The difference between the previous day's closing price and the last traded price. Net Worth The difference between a company's or individual's total assets and its total liabilities.
Also known as shareholders' equity for a company. New Issue A stock or bond issue sold by a company for the first time. Proceeds may be used to retire the company's outstanding securities, or be used for a new plant, equipment or additional working capital.
New debt issues are also offered by governments. New Issuer Listing Occurs concurrently with the posting of the new issuer's securities for trading. The preconditions for listing include the acceptance by the Exchange that all listing requirements and conditions have been satisfied. The effective listing date is the date when the listed securities open for trading.
These applications in themselves provide prospectus-level disclosure; however, often the listing application is accompanied by an offering document or a prospectus. The issuer's security would be delisted from TSX Venture Exchange and listed on TSX at the same time, permitting continuous listing of the securities on contiguous exchanges. The offering is often made in conjunction with an issuer's initial application for listing on an exchange.
A plan of arrangement is a form of corporate reorganization that must be approved by a court and by the corporation's shareholders or others affected by the proposed arrangement, all as prescribed by corporate legislation. A plan of arrangement can take various forms, including:. New Issuer Listing - Spin-Off A reorganization that usually results in a newly listed issuer acquiring a business division or assets as its principal operating asset from another issuer the reorganized issuer , with security holders of the reorganized issuer holding securities in both issuers, following completion of the reorganization.
The issuer's security would be delisted from TSX and listed on TSX Venture Exchange at the same time, permitting continuous listing of the securities on contiguous exchanges. New Listing A security issue that is newly added to the list of tradable security issues of an exchange. It is accompanied with a new listing date. They are identified with an extension of "H" added to their stock symbol. Non-Certificated Issues An issue that is recorded on the transfer agent's electronic book rather than being held as a physical note.
Non-Client Order An order from a Participating Organization or an order a firm is executing on behalf of an institution, such as a mutual fund. An "N" denotes a non-client order in the book. Non-Exempt Issuer A listed issuer that is subject to special reporting rules. Non-Net Order A special-term order when there is a clear understanding between the buying and selling parties that they will settle the trade directly with each other. Non-Resident Order A special term order when one or more participants in the trade is not a Canadian resident.
Oo Odd Lot A number of shares that are less than a board lot, which is the regular trading unit decided upon by the particular stock exchange. An odd lot is also an amount that is less than the par value of one trading unit on the over-the-counter market. For example, if a board lot is shares, an odd lot would be 99 or fewer shares. One-Sided Market A market that has only buy orders or only sell orders booked for a particular security.
An on-stop order becomes a limit order once a trade at the trigger price has occurred. Ontario Securities Commission The government agency that administers the Securities Act Ontario and the Commodity Futures Act Ontario and regulates securities and listed futures contract transactions in Ontario. Open Order An order that remains in the system for more than a day.
Open-End Investment Fund An investment fund that continuously offers its securities to investors and stands ready to redeem its securities at all times. Examples of an open-end fund are traditional mutual funds and exchange-traded funds ETFs. Option The right, but not the obligation, to buy or sell certain securities at a specified price within a specified time. A put option gives the holder the right to sell the security, and a call option gives the holder the right to buy the security.
Option Class All options of the same type, either calls or puts, that have the same underlying security. Option Holder The buyer of an option contract who has the right to exercise the option during its lifetime. Option Writer The seller of an option contract who may be required to deliver call option or to purchase put option the underlying interest covered by the option, before the contract expires. Order Number An eight or nine-digit number assigned to every order entered into the system.
Almost all bonds and debentures, as well as some stocks, are traded over-the-counter in Canada. An OTC market is also known as an unlisted market. Pp Par Value A security's nominal face value. Partial Fill An order receives a partial fill when it trades only part of its total committed volume. However, only POs are also involved in all aspects of the securities business, including underwriting new issues and other financings, and assisting companies in the initial public offering IPO process.
Portfolio Holdings of securities by an individual or institution. A portfolio may include various types of securities representing different companies and industry sectors. Position Limit The maximum number of futures or options contracts any individual or group of people acting together may hold at one time. They are investment vehicles that have underlying businesses that are utilities, power generation companies, or pipeline companies.
Preferred Share A class of share capital that entitles the owner to a fixed dividend ahead of the issuer's common shares and to a stated dollar value per share in the event of liquidation. It usually does not have voting rights, unless a stated number of dividends have been omitted. Pre-Opening Session A session from 7: ET when orders can be entered into the Toronto Stock Exchange's systems.
Tradable orders will be queued until after 9: This ratio shows you how many times the actual or anticipated annual earnings a stock is trading at. Principal Trade A trade when a Participating Organization is either buying from, or selling to its client.
Priority If there are several orders competing for a stock at the same price, a priority determines when one of these orders will be filled before any other at this price. Priority is based on the time at which the order is received into the system. Private Placement The private offering of a security to a small group of buyers. Resale of the security is limited. The number of securities is the actual number issued. The composition of the financing could take the form of units comprised of multiple securities.
Professional and Equivalent Real-Time Data Subscriptions The total number of professional accesses to real-time products of TSX and TSX Venture Exchange, as well as non-professional accesses that are priced the same or at a minimal discount to the professional access rate for the same product. Profit What is left over for the owners of a business after all expenses have been deducted from revenues.
Gross profit is the profit before corporate income taxes. Net profit is the final profit of the business after taxes have been paid. Prospectus A legal document describing securities being offered for sale to the public.
It must be prepared in accordance with provincial securities commission regulations. Prospectus documents usually disclose pertinent information concerning the company's operations, securities, management and purpose of the offering. Push-Out A push-out occurs during a stock split when new shares are forwarded to the registered holders of old share certificates, without the holders having to surrender the old shares.
Both the old and new shares have equal value. Put Option A put option is a contract that gives the holder the right to sell a specified number of shares at a stated price within a fixed time period.
Put options are purchased by those who think a stock may decline in price. Rr Rally A brisk rise in the general price level of the market or price of a stock.
Real Estate Investment Trust REIT Typically, a closed-end investment fund that trades on an exchange and uses the pooled capital of many investors to purchase and manage income properties. Equity REITs primarily own commercial real estate, such as shopping centres, apartments, and industrial buildings.
By taking advantage of the trust structure, REITs offer tax advantages beyond traditional common equity investments to investors and provide a liquid way to invest in real estate, which otherwise is an illiquid market. Redeemable Security A security that carries a condition giving the issuer a right to call in and retire that security at a certain price and for a certain period of time. Registered Traders A trader employed by a securities firm who is required to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill.
Their duties include providing a minimum guaranteed fill, maintaining minimum spread and ensuring orderly trading. Retractable Security A security that features an option for the holder to require the issuer to redeem it, subject to specified terms and conditions. Rights A temporary privilege that lets shareholders purchase additional shares directly from the issuer at a stated price. The price is usually less than the market price of the common shares on the day the rights are issued.
The rights are only valid within a given time period. It is market capitalization weighted, with weights adjusted for available share float, and includes securities of 60 issuers balanced across ten economic sectors. It is the leading benchmark used to measure the price performance of the broad, Canadian, senior equity market.
This index does not have a fixed number of constituents. Seat The traditional term for membership on a stock exchange. An investment dealer or brokerage buys a seat on the exchange and one employee is designated as the seat holder.
As Toronto Stock Exchange is now demutualized, there are no longer seats on the exchange. It is the stated prospectus price multiplied by the "number of securities issued under the offering plus the over allotment".
Securities Transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options. Securities Commission Each province has a securities commission or administrator that oversees the provincial securities act.
This act is a set of laws and regulations that set down the rules under which securities may be issued or traded in that province. Members include banks, brokers, dealers and mutual fund companies. SEDAR is an electronic filing system that allows listed companies to file prospectuses and continuous disclosure documents. The Canadian Securities Administrators, Canadian Depository for Securities Limited and the filing community developed it, with co-operation from legal firms and stock exchanges.
Seed Stock The shares or stock sold by a company to provide start-up capital before carrying out an initial public offering IPO. Self-Regulatory Organization An organization recognized by securities administrators as having powers to establish and enforce industry regulations to protect investors and to maintain fair, equitable and ethical practices in the securities industry.
Settlement The process that follows a transaction when the seller delivers the security to the buyer and the buyer pays the seller for the security. Settlement Date The date when a securities buyer must pay for a purchase or a seller must deliver the securities sold.
Settlement must be made on or before the third business day following the transaction date in most cases. Settlement Price The price used to determine the daily net gains or losses in the value of an open futures or options contract. Share Certificate A paper certificate that represents the number of shares an investor owns.
Short Selling The selling of a security that the seller does not own naked or uncovered short or has borrowed covered short. Short selling is a trading strategy. Short sellers assume the risk that they will be able to buy the stock at a lower price, cover the outstanding short, and realize a profit from the difference. Special Terms Orders which must trade under special conditions.
For example, a cash order will be settled sooner than the usual three-day settlement period. Special Trading Session A session during which trading in a listed security is limited to the execution of transactions at a single price. Speculator Someone prepared to accept calculated risks in the marketplace for attractive potential returns.
Split Shares Capital and preferred shares issued by a split-share corporation. A split-share corporation holds common shares of one or more companies. The corporation then issues two classes of shares - capital shares and preferred shares. The objective is to generate fixed, cumulative, preferential dividends for the holders of preferred shares and to enable the holders of the capital shares to participate in any capital appreciation or depreciation in the underlying common shares.
Standing Committees Committees formed for the purpose of assisting in decision-making on an ongoing basis. The issuer or its representative provides the amount, payable date, and record date.
Stock Index Futures Futures contracts which have a stock index as the underlying interest. Stock List Deletion A security issue that is removed or delisted from the list of tradable security issues of an exchange. It is usually accompanied with a reason for deletion and the deletion date.
Stock Price Index A statistical measure of the state of the stock market, based on the performance of certain stocks. Stock Split A corporate action that increases the number of securities issued and outstanding, without the issuer receiving any consideration for the issue.
Approval by security holders is required in many jurisdictions. Each security holder gets more securities, in direct proportion to the amount of securities they own on the record date; thus, their percentage ownership of the issuer does not change.
For example, a two-for-one stock split involves the issuance of two new securities for every old security. Stock Symbol Extension The character or characters that may follow the stock symbol to uniquely identify a listed security.
It can be a single alphabetic character, two alphabetic characters, or a combination of two plus one characters with a maximum of eight characters for the stock symbol, extension and separator dots in between. Street Certificate These are certificates registered in the name of a securities firm rather than the owner of the security. This makes the certificate easily transferable to a new owner.
Strike Price The price the owner of an option can purchase or sell the underlying security. The purchases and sales are also known as calls and puts. Structured Products Closed-end or open-end investment funds, which provide innovative and flexible investment products designed to respond to modern investor needs, such as yield enhancement, risk reduction, or asset diversification. Based on the investment strategy, the portfolio can purchase a basket of securities, track an index, or hold a specific type of security or portion of a security.
The subcategories under the structured products include: Substitutional Listing A broad category of transactions that involves one security on the stock list being replaced by another security or securities. Supplemental Listing A type of listing transaction, made after an issuer's original listing, that involves the listing and posting for trading of a new issue of securities.
Typically, this involves the listing of preferred shares, rights, warrants, or debentures. Supplemental also covers the additional listing of when-issued shares through a secondary offering of an issue that is already listed. It is the stated prospectus price multiplied by the "number of securities issued under the supplemental listing plus the over allotment". Suspended Issue The status of a listed security of an issuer whose trading privileges have been revoked by the Exchange.
All securities of the issuer remain suspended until trading privileges have been reinstated, or the issuer is delisted. The listed issuer remains suspended until trading privileges have been reinstated, or the listed issuer is delisted. Symbol Change A change in a listed issuer's stock symbol, which may be required by the Exchange in the context of an issuer's reorganization or may be made at the request of the issuer.
A requested symbol is available for use if it is appropriate for the type of security and the issuer's voting structure. Tt Thin Market A market that occurs when there are comparatively few bids to buy or offers to sell, or both. The phrase may apply to a single security or to the entire stock market. In a thin market, price fluctuations between transactions are usually larger than when the market is liquid. A thin market in a particular stock may reflect lack of interest in that issue, or a limited supply of the stock.
Tick Slang used for minimum spread. Depending on the stock price it could be a half-cent, one cent or five cents. Ticker Tape Each time a stock is bought and sold, it is displayed on an electronic ticker tape.