Glossary of Stock Trading and Investment Terminology


The “Organisation of the Petroleum Exploring Countries” or “OPEC” is an international organisation formed by some of the key oil producing countries.

Brief Background History

Buy and Hold

Buy and Hold is an investment strategy where shares are bought then held for long periods of time (years), regardless of market fluctuations. Shares are held on the assumption that stock prices will go up in the long run (capitalist economies expand, so stock prices rise as well). The opposite of buy and hold is day trading.

Point and Figure Charts

The Point and Figure Charts uses a series of Xs and Os in order to plot the price changes in the market at a daily basis. The increase in price is represented by a column of Xs while the Os stands for the falling price.

Cross Currencies

Cross currencies refers to a pair of currencies that does not include the US dollar (USD). In case of foreign currency trading, it is a common practice to exchange a foreign currency with U.S. dollar before trading. But in case of cross currencies, a trader does not need to convert a currency into US dollar before transforming it back to another currency that he is willing to trade.

Renounceable Rights Issue

A renounceable rights issue is when a company offers its shareholders the right to purchase more of the company’s stock, usually at a discount to market rate. Compare this right to a non renounceable rights issue. Stockholders who are offered a renounceable rights issue can either:

  1. Accept the offer
  2. Sell their rights to the market
  3. Pass on taking advantage of the rights offer

Spreads (Forex)

Just like the equity market, Forex is also quoted by the bid and ask prices where the difference or gap between the bid and ask is termed as the “Spread”. It is important to keep in mind that Forex trading is not commission free. As far as the Forex is taken under consideration, the brokers might come up with the claim that they do not charge any typical brokerage but instead of that, the commission is added in the spread.

Moving Averages

Moving average (in short MA) is a kind of indicator which is used for technical analysis in order to show the average value of the price of a security over a specific period of time. Moving averages are normally used to serve various purposes like for defining areas of possible support and resistance, for determining the momentum as well as for smoothing out the noise which occurs due to volume functions.

Price-to-Book Ratio (P/B Ratio)

The Price-to-Book Ratio or P/B Ratio is determined by dividing the current closing price of a stock by the book value per share of the latest quarter. P/B Ratio is termed as price-equity ratio too.

Interpreting the Price-to-Book Ratio

Platform (Master Trust and Wrap Account)

Master trusts and wrap accounts are mainly used by the financial planners for monitoring and recording the investments of the clients. These days often you will find the financial advisers asking their clients to make their investments through a wrap or master account which is also known as an administrative platform. Some advisers may go even further offering their clients a variety of platforms, coming with different selections of shares or managed funds on each.

Market Maker CFDs

A trader can buy or sell CFDs directly from the provider if the CFD provider himself is playing the role of the Market Maker, they may or may not move forth and hedge such exposure in the underlying market.

In case of the market maker CFD model, the traders dealing with CFDs does not always get hedged in the underlying market but instead a synthetic market is developed which means an investor will be quoted a Bid and Ask along with the liquidity for trading.

Advantages of Market Maker CFDs