Glossary of Stock Trading and Investment Terminology

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.

Trading Warrants


Trading warrants are the securitised warrants that are traded like stocks in the Australian Stock Exchange (ASX). Trading warrants can be classified into two categories:

  • Calls
  • Puts

One of the positive things about trading warrants is that they are traded in ASX just like shares, which is not the case for futures and options. If you are one of those traders who look forward to take advantage of the short-term changes in price, warrants should be the ideal option to go for.

Trends


Trends or market trends refer to the tendency of the financial market to move towards a certain direction. Often you will see investors in the share market hunting for stocks that are moving in a specific direction which can be either upward or downward.

RSI


Relative Strength Index or RSI is a technical analysis indicator that determines the magnitude of gains against the magnitude of losses over a certain period of time. RSI is widely used to determine whether a market is overbought or oversold. The calculation involves doing analysis of the bullish ranges against the bearish ranges for a certain period of time which is usually 14 days.
The calculation of RSI is done in the following way:

RSI = 100 - (100 / 1 + RS)

Technical Analysis


The study of charts in order to predict the future movement of prices is termed as the Technical analysis. People who conduct such studies are known as technical analysts who analyse factors like the historic market data, mostly volume and price.

Ethical Investing


Ethical investing is a kind of investment policy that involves targeting those managed funds or stocks which follow a set of ethics when investing. Ethical investing is also known as "green investing" and "socially responsible investing". Investors involved in ethical investing do want to maximize their profit through their investments but at the same time wants to play a constructive role for the welfare of the society.

Exchange Traded Funds (ETFs)


Exchange traded funds (ETF) are the ones that track an index but are traded like stocks on the Australian Securities Exchange (ASX). In case of ETF, the shares are bundled together in the index so that the traders can easily sell or buy them through a single transaction.

What is a Market Maker?


In terms of the Australian stock market, a market maker is a broker who creates a simulated market, quoting both a buy and a sell price in a financial security, either a stock or a derivative (e.g. ASX instalments, forex dealers or certain CFD brokers). Market makers make their profit from the bid offer spread. Because marketmakers quote buy and sell simultaneously, they create liquidity in the market.

OPEC


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

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.