Stock Trading Terms You Need to Know

American Stock Exchange (AMEX): This is a marketplace where traders can trade all types of securities. It has the third-highest trading volume in the United States (US), most of which are index options and shares of small to medium size companies.

Consumer Price Index (CPI) : This measures the average price change over time purchased by urban consumers for a market basket of consumer goods and services.

Current Assets: This refers to any assets that can be converted into cash in less than a year.

Dividend: This is the distribution of profits companies make to their existing shareholders, commonly paid regularly. Dividends are one of the many ways investors can generate a return through stock investment.

Earnings Per Share (EPS): This refers to the portion of a company’s profit that is allocated to an outstanding share, usually indicating a company’s profitability.

Face Value: Also referred to as par or dollar value of security, this is the amount agreed to be paid by an issuer at maturity.

Financial Statement: This is an accounting data report that allows investors to better understand a firm's financial history.

Initial Public Offering (IPO): This is the process of offering shares of a private corporation to the public in a new stock issuance.

Market Capitalisation: This is the total amount of outstanding shares in dollars for the total outstanding shares multiplied by the current market price.

Market Order: This is an order to buy or sell a stock at the best available price, which can typically be executed at the time of the order.

Market Price: This is the current price of a security at which it can be bought or sold, where the price is determined by the forces of supply and demand.

Market Value: This is the worth of a company as determined by investors, calculated as outstanding shares multiplied by the firm’s current market price.

Price-Earnings (P/E) Ratio:This is calculated by taking the current stock price divided by annual earnings per share.

Shareholder: This is someone who owns shares in a corporation.

Short Sale: This is the sale of a security by a seller who does not own it but is obligated to repurchase it at a later date.

Stock Certificate: This is a shareholder’s documentation of the shares they own in a corporation.

Stock Split: This occurs when a company issues new shares, lowering the stock's market price to the price before the split.

Stock Symbol: Also known as a ticker symbol, this is a security’s label used for trading.

Voting Rights: This is something possessed by security holders on votable matters within a company.