Document No.

TWI-001
Title: Date Prepared
UNDERSTANDING STOCK 15 August 2017
Document Security Level
MARKET TERMS
For Personal Use Only
(not for sale)
Page
1 of 6
Compiled by :
The Wise Investor Revision
0

Understanding Stock Market Terms

Stock Market Terminology and Definitions

Everyone, beginner and veteran traders alike, can learn from this…

Table of Contents
1. Definition of Terms

1.1 Fundamental Analysis

1.2 Technical Analysis

This document is to be reproduced only with permissions from The Wise Investor.
 Document No.
TWI-001
Title: Date Prepared
UNDERSTANDING STOCK 15 August 2017
Document Security Level
MARKET TERMS
For Personal Use Only
(not for sale)
Page
2 of 6
Compiled by :
The Wise Investor Revision
0

1. Definition of Terms:

 Invest - putting your money where it can grow

 Stock - a share in the company
 Dividends - the amount of money paid by the company to its shareholders
 Common Stock - the type of stock that is least prioritized when declaring
dividends, mostly profit from price appreciation
 Preferred Stock - the type of stock that is first prioritized when declaring
dividends
 Risk - the potential of gaining profits and losing your capital, the more the risk,
the more the reward
 Returns/Rewards - profits earned by investors in their investment either
through dividends or price growth
 Short Term - less than six weeks
 Medium Term - six weeks to nine months
 Long Term - more than nine months
 Investors - people who invests their money with the expectation of gaining
returns over longer timeframe
 Traders - people who buy and sell stocks and earn from price growth over a
shorter timeframe
 Blue-Chip Stocks - stocks of the biggest companies in the country
 Growth Stocks - stocks which have high growth potential
 Value Stocks - stocks which have low P/E ratio
 Speculative Stocks - stocks which are overpriced compared to its similar
stocks
 Defensive Stocks - stocks which does not decrease its price immediately even
when the market is down
 Penny Stocks - stocks which have small market capitalization and trade at
very low price
 Stock Market - where investors or traders buy and sell company stocks
 Stock Market Index - a measurement of the value of the entire stock market or
a particular industry in the market
 PSEi (aka PSE Composite Index) - the stock market index of Philippine Stock
Exchange which consists of top 30 listed companies based on market
capitalization

This document is to be reproduced only with permissions from The Wise Investor.
 Document No.
TWI-001
Title: Date Prepared
UNDERSTANDING STOCK 15 August 2017
Document Security Level
MARKET TERMS
For Personal Use Only
(not for sale)
Page
3 of 6
Compiled by :
The Wise Investor Revision
0

 Industry Index - the index of a group of companies which are classified based
on their business activities (i.e. Financial, Holdings, Industries, Mining & Oil,
Properties, Services)
 Bullish - when a particular stock market or stock is uptrend
 Bearish - when a particular stock market or stock is downtrend
 Initial Public Offering (IPO) - when firms are selling their company shares for
the first time in the public to raise capital
 Market Value - the value at which a stock can be sold in the market
 Unrealized P/L - profits or losses which are not yet realized until the investor
has sold the stock
 Buying Power - the available money an investor has in his account for buying
stocks
 Buy Order - a type of order when the investor wants to buy stocks
 Sell Order - a type of order when the investor wants to sell stocks
 Volume - number of shares bought and sold in a particular day
 Bid - the prices at which the buyers want to buy a particular stock, arranged in
descending order
 Ask - the prices at which the sellers want to sell a particular stock, arranged in
ascending order
 Trade - made when the bid and ask price have matched
 Brokers - firms who execute the buy and sell orders and get commission fees
for every transaction
 Portfolio - a group of financial assets such as stocks held by the investor
 Average Cost/Price - the price at which you bought the market plus the
commission fees
 Shares - the number of stocks you bought
 Board Lot - the standardized minimum and multiple number of shares to be
traded for a particular stock, depends per price range
 Stock Order - ordering stock, either buy or sell order
 Normal Orders - orders which follow the normal board lot
 Oddlot Orders - orders which are less than the minimum board lot
 Good to Day (GTD) - an option in ordering where your order will expire at the
end of trading day when not fulfilled
 Good to Week (GTW) - an option in ordering where your order will last for a
week
 Good to Month (GTM) - an option in ordering where your order will last for a
month

This document is to be reproduced only with permissions from The Wise Investor.
 Document No.
TWI-001
Title: Date Prepared
UNDERSTANDING STOCK 15 August 2017
Document Security Level
MARKET TERMS
For Personal Use Only
(not for sale)
Page
4 of 6
Compiled by :
The Wise Investor Revision
0

 Good to Cancel (GTC) - an option in ordering where your order will last until
you cancel
 Cash Dividends - dividends declared through cash
 Stock Dividends - dividends declared through additional shares of stocks
 Profits/Gains - the amount that an investor earns when he sells stocks at a
price higher than his average costs
 Losses - the amount that an investor losses in his capital when he sells stocks
at price lower than his average costs
 Stock Split - when a company decides to split its stocks in a particular ratio to
increase liquidity (i.e. 1 to 2)
 Reverse Stock Split - opposite of stock split, when a company decides to
combine its stocks in a particular ratio to decrease number of shares (i.e. 2 to
1)
 Most Active - most active stocks in a particular day in terms of volume traded
 Top Gainers - list of stocks which has increased in price in a particular day
 Worst Losers - list of stocks which has decreased in price in a particular day
 Year to Date (YTD) - the period from the beginning of the year (January 1) to
present
 Investment Strategy - set of rules and behaviors an investor practices towards
his investment portfolio
 Peso Cost Averaging - an investment strategy where you put the same
amount of money into a particular stock in a regular schedule
 Value Investing - an investment strategy where investors look for undervalued
stocks
 Growth Investing - an investment strategy where investors look for companies
which have a high growth potential
 Cut Loss - realizing your loss by selling the stock to save you from a bigger
loss
 Average Down - buying a stock for a lower price than your average cost

This document is to be reproduced only with permissions from The Wise Investor.
 Document No.
TWI-001
Title: Date Prepared
UNDERSTANDING STOCK 15 August 2017
Document Security Level
MARKET TERMS
For Personal Use Only
(not for sale)
Page
5 of 6
Compiled by :
The Wise Investor Revision
0

1.1 Fundamental Analysis

 Fundamental Analysis - evaluates the economic and financial factors that

affect the intrinsic value of a company, studies the causes of market
movements
 Intrinsic Value - the actual and true value of the company based on all
aspects of its businesses
 Overvalued - when the current price of the stock is not justified by its company
earnings
 Undervalued - when the current price of the stock is below its intrinsic value or
industry P/E ratio average
 Income Statement - provides an overview of assets, liabilities and equity
 Balance Sheet - provides an overview of revenues, expenses and net income
 Statement of Cash Flows - traces the company's cash movement from
operating, investing and financial activities
 Financial Ratios - ratios derived from the financial statements of the
companies which are used for evaluating the overall condition of its company
performance
 Price to Earnings Ratio (P/E Ratio) - measures the current price of a stock
over its company earnings per share, the lower the better
 Earnings per Share (EPS) - company earnings for the year divided by the
number of shares
 Leverage - borrowing capital through loans and using it to fund company
activities
 Debt Ratio - the ratio of total debt to total assets of the company, the lower the
better
 Debt to Equity Ratio/Leverage Ratio - the ratio of a company's debts to the
value of its equity (preferred and common stocks)
 Dividend Payout Ratio - the ratio of dividends paid in relation to company's net
income
 Dividend Yield - the percentage of dividends declared in relation to the stock's
current price
 Par Value per Share - the price of the stock during its Initial Public Offering
(IPO)
 Book Value per Share - the value of the stock in the company's books, total
equity divided by number of shares

This document is to be reproduced only with permissions from The Wise Investor.
 Document No.
TWI-001
Title: Date Prepared
UNDERSTANDING STOCK 15 August 2017
Document Security Level
MARKET TERMS
For Personal Use Only
(not for sale)
Page
6 of 6
Compiled by :
The Wise Investor Revision
0

 Price to Book Value Ratio - the ratio used to compare company's current price
and its book value, the lower the better

1.2 Technical Analysis

 Technical Analysis - the study of financial market action/ price action

 Trend - the general direction of a market, or the price of an asset
 Uptrend - the price of a stock moves at a higher high and a higher low
 Downtrend - the price of a stock moves at a lower high and a lower low
 Sideways - the price of a stock moves in a flat manner
 Chart - contains the summary of a stock's prices within a certain period
 Open - the first price a stock trades at
 High - the highest price it reaches in a trading day
 Low - the lowest price it reaches in a trading day
 Close - the final trading price of the day
 Volume - measures the number of shares or value of those shares that trade
in a day
 Value Traded - volume multiplied by the price that investors have paid for a
stock
 Indicators/Oscillators - measure the price movements, momentum, and others
based on price and volume of a stock
 Support - a price level which historically, a stock has had difficulty falling
below
 Resistance - a price level which historically, a stock has had difficulty breaking
above
 Breakdown - a break below the support level
 Breakout - a break above the resistance level
 Reversal - the change of a price level from resistance/support to
support/resistance after a breakout/breakdown
 Stop Loss - a price that has been previously identified as the maximum loss a
trade can assume

- End –

Reference: http://www.pseacademy.com.ph

This document is to be reproduced only with permissions from The Wise Investor.