Glossary of Stock Trading and Investment Terminology

Breakout


When prices pass and stay through an area of support and resistance, breakout happens. On a chart, breakout is when stock prices exit an area pattern. In general, traders buy when the price passes above the resistance point and sell when the price passes below the resistance point. Breakouts can be due to financial unions, developments, and evolutions (announcement of company alliance or takeover, etc.).

Market Order


Market order is a type of order to buy or sell stocks at their current market price. Market order is considered as one of the simplest type of orders which allows executing a trade within a shortest period of time and prevents all sorts of discretion for price or time.

Contingent Order


Contingent order (also called a net order or a "not held" order) is the placement of two share orders; one order cannot be initiated without the other. For example, customer A places a buy order and a sell limit order in the market. The buy cannot proceed unless the sell limit order is also executed. An example of a contingent order is a buy-write. When two separate transactions must occur at the same time, contingent orders are usually placed.

Zero Sum Game


Zero Sum Game refers to the situation where one party or individual gains as a result of the equivalent loss of another party or individual. In this case, the net change of total wealth is zero among the parties since wealth has just shifted from one to another. It can be seen in a way that, every buyer has a seller and there is a short position available for every long position. Some may also see it like for every dollar that has been gained, there is a loss of one dollar.

EBITDA


EBITDA refers to the earnings before interest, taxes, depreciation and amortisation. This is a type of measurement process which allows an investor to have some idea about how much money a company is generating before the deduction of taxes, deprecation and amortisation. It is very much important for any investor to know how much money a particular business is making before deciding whether to invest money in that business and EBITDA is considered as one of those methods that can be used by the investor to find that. EBITDA is calculated through the following formula:

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