Glossary

ACAT (Automated Customer Account Transfer): A system that transfer a trading account from one broker to another.
Bear Market: Downturn on the economy where investors are pessimistic about the outcome of the market
Bull Market: Upward market trend where investors think positively about the movement of the market.
Inactivity Fee: A fee charged to an account when the account's trading activity does not meeet the broker's criteria for the minimum trading frequency.
Limit Order: An order given to the broker to purchase or sell a specified quantity of shares of securities at a specified price or better.
Long: The buying of securities in the expectation that the price will go up.
Maintenance Call: An action that requires borrowers to deposit additional cash or securities to the margin account when it falls below the maintenance margin. If the customer do not add any cash or securities, then the broker would sell the securities in the customers account without permission to meet up with the minimum maintenance margin requirement.
Maintenance Fee: A fee charged to an account when the account's total asset balance does not meeet the broker's criteria for the minimum balance.
Maintenance Margin: The minimum value in equity that a margin account must have when the account is trading on margin.
Margin Account: Account in which the investors are able to borrow cash from the brokers to buy securities.
Market Capitalization: The total market value of a company calculated by multiplying the stock price per share with the total shares outstanding.
Market Order: An order where the broker executes a transaction at the current price - purchase securities at the current ask price and sell securities at the current bid price.
Moving Average: The average value of a stock's price over a pre-defined period of time.
Options: The right but not the obligation to buy (call) or sell (put) a stock at a specified price within a specific time period.
Pattern Day Trader: A trader who executes more than 3 trades within 5 days (a week) is considered a pattern day trader.
P/E Ratio (Price to Earning Ratio): One method of valuating a company calculated by dividing a company's stock price by its earning per share. The number shows how much investors is actually paying for each dollar the company earns.
Short Selling: The selling of securities in which you don't own in the expectation that the price will drop. The brokers would lend the securities to the investors. Investors will buy back the stocks when the stock price drops and gains the profit at the the price difference.
Spread: The difference between the ask and bid price
Stop Order: An order placed with the broker to purchase or sell securities when it surpasses certain price in order for the investors to limit the loss or to lock on the profit. Once the predefined price is reached, the order would be treated as market order. For example, you buy GOOG at $600 and you place a stop loss order at $550. The broker will sell your stock when it reaches $550 and thus limiting your loss to $50.
Straddle: An option strategy where investors buy both a call and a put at the same strike price and expiration date
Trailing Stop Loss Order: An adjusting stop order that adjusts itself with the fluctuation of the market price of the stock by a set of point or percentage level. For example, you buy GOOG at $600 and you place a trailing stop loss order at 50 point below. Your stop loss order would be $550. When GOOG price suddenly jumps to $700, the stop price would trail with the market price and becomes $650. The broker will then sell your stock when it drops to $650 and below. If the stock price falls to $651, the stop loss order is still $650, but if it then jumps again to $800, the stop price trails the market price and becomes $750 and so on.
Value Investing: Buying underpriced securities based on the fundamental analysis including P/E, MVA. Value investors will then sell their positions when the securities have reached their fair value.