Glossary of Stock Trading and Investment Terminology

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

Instalment Warrants


An instalment warrant is a product where a share is offered on credit. Investors initially buy half the shares and pay for the rest of the amount later. The first payment instalment entitles you dividends and franked credits, while the final instalment is a fixed amount.

An instalment warrant is comparatively expensive. Initial payment on warrant that matures in 18 months can set back a trader around $111 for every $100 of market value. Like all 'borrowed' investments, instalment warrants intensifies losses and gains.

Guaranteed Stop Loss


What is Guaranteed stop loss?

Guaranteed stop loss (GSL) is a kind of protection provided by a CFD provider to an investor in order to make sure that the investor is not incurring significant amount of loss due to unfavorable market conditions. The whole idea of guaranteed stop loss is to reduce the negative effects of price gapping. It will provide the necessary protection for the investors regardless of what happens to the original share price.

Understanding the GSL through scenario

Bull Market


A bull market happens when stock prices rise significantly (historically, 50 percent increases or more) and the market is on an upward trend. The name bull market can also refer to bonds and currencies. Investors usually get more confident in a bullish market and begin to buy shares for higher returns on their capital.

Bear Market


Downward market trends and heavy decline in stock prices describe a bear market. Bear market duration can be short or long (decades or more). In general, a bearish market is pronounced when prices decline by 15-20 percent or more over a period of two months or over.

Investors usually lose confidence and sell shares in a bear market, but there are people who prefer to buy and trade rather than buy and hold, thus making quick gains. These traders take advantage of the bearish turn by strategies such as short selling.

SPI


If you want to trade the overall stock market with a single trade, then Share Price Index Futures or SPI futures and options and the options contracts might be the right choice. Trading the SPI 200 is similar to trading a balanced share portfolio that tracks the S&P/ASX index. Share Price Index Futures tracks the S&P/ASX 200 index and considered most popular among the future contracts. It is to be mentioned that in case of the SPI, the transaction can be filled within seconds.

Relation between SPI 200 and S&P/ASX 200

Offer (Ask)


Offer refers to the price at which the sellers are willing to sell their shares. In most cases offer is the highest price that a buyer is willing to pay for a particular asset while on the other hand it is the lowest price at which the seller is interested to sell the asset.

Direct Market Access (DMA)


In case of Direct Market Access (DMA), both the CFD prices and liquidity remains equal to the underlying market. This is why traders or investors can enter positions at the identical market price when it comes to direct market access. Investors who follow this particular model are termed as the DMA CFD traders.

Dividend Imputation


The term "Dividend Imputation" refers to a particular corporate taxation system under which the tax paid by a business organisation is attributed completely or partially to the investors (shareholders) in the form of tax credit which allows the organisation to slash its income tax payable on the distribution of its earnings.

Bottom Up Investing


When investing bottom up, individual shares and companies are researched and analysed. Investments are made based on future forecasts, rather than market cycles. Bottom up investing is recommended for investors who are familiar with the market. It is not a recommended strategy for those who make global-scale investments.

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