Friday, February 3rd 2012 - 06:13:49 pm

TradeStocksAmerica.com Glossary of Terms

Glossary of Terms
(Some abbreviations are for communication on the Trading Room)

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Bearish – is a term describing the market conditions or expectations that stocks will drop in price. Opposite of bullish.

Beta - A measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the S&P 500. A beta above 1.0 is more volatile than the overall market, while a beta below 1.0 is less volatile.

Bid – the price at which you would sell a stock on a market order; the price which a market maker or specialist stand ready to buy a certain number of shares at a specific price.

Bid size - The number of shares that are being offered for purchase at the bid price, often expressed in terms of hundreds of shares. Some traders try to use the bid size and ask size to measure impending short term upward or downward pressure on the stock's price although this has limited usefulness. See Level 2 on Disc #2 in Wizard Training Course.

Block Trade - A large amount of securities being traded, typically at least 10,000 shares of stock or $200,000 in bonds. Normally, only institutional investors undertake such large trades such as mutual funds, investment banks, and money management firms. Block trades can affect the market price of the security, depending on what stock it is.

Board of Directors - Individuals elected by a corporation's shareholders to oversee the management of the corporation. The often choose the CEO that will run the company, develop procedures for monitoring management and give input on the key decisions facing a company. The members of a Board of Directors are paid in cash and/or stock, meet several times each year and have become much more proactive and visible in major corporations than in the past decades.

Bollinger Bands – Created by John Bollinger, is a band plotted two standard deviations away from a simple moving average and is used to measure when a stock is overbought or oversold. An upper and lower band defines a “channel” in which normal stock prices will stay within. When the stock price moves suddenly upward and approaches or exceeds the upper band, the odds increase that the stock will drop in price and likewise on the lower band.

Bounce describes a stock reversing in direction and going upward in price.

BBL – Be back later.

Book Value – Theoretically, this represents how much the company is worth after all liabilities are deducted from assets, less preferred stock, and allowance for goodwill. This is often used by value investors when evaluating the price of the stock vs. the book value price. A fast growing company, like a young technology company, would not have a high book value compared to an older more mature company.

Bouncing – stock going up after it had previously been going down

BP – Buying Power

BRB – be right back, as in away from the computer for a moment.

Breadth – the number of stocks moving up vs. moving down.

Bulletin Board - An electronic quotation system for unlisted, non-Nasdaq, over-the-counter securities that do not meet the more strict listing requirements of other exchanges such as the NYSE, AMEX or the NASDAQ National Market System (NMS).

Bullish is a term describing the market conditions or expectations that stocks will rise. Opposite of bearish. Also called OTC Bulletin Board.

Bullshort – a trading model developed by Mitch King in the early 1990’s that is a short selling technique of stocks that have had a large and quick price increase usually triggered by news events, speculation, promotion, and momentum traders buying the stock. This type of technique is usually effective in bullish or neutral market conditions, not overly bearish or negative conditions.

Bull trap – a rise in the stock price within a declining trend. This sign may just represent a short term rise in the stock price followed by a lower low and lower high in following weeks. It is seen as a trap because some people will see this signal and purchase the stock because they believe they will benefit from this increase in value, but they are trapped with a poor performing stock when they find out that the stock is still falling.

Bungee – a stock or market can drop in a sharp and immediate way that resembles a bungee jumper who stretches out the cord and an expected rebound in the stock (jumper) can catapult upward of people realize that the selling was unwarranted; “stretched like a bungee cord.”

Buy to Cover - is closing a short position. Selling short is the opening position.

Buying on Margin - A higher risk technique involving the purchase of securities with borrowed money from the brokerage firm you use. The collateral of the loan is the shares you actually purchased in your account. This is done using a margin account at a brokerage firm, and subject to strict SEC regulations.

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