Glossary of Stock Trading and Investment Terminology

Agribusiness Investments


The term agribusiness investments refer to investments in various agricultural sectors including timber and wine. In the case of agribusiness investments, an investor grows crop and the cost involved with it (which includes the expense of establishment and ongoing expenses) is normally considered as business expenses which are tax-deductible against other earnings. The earnings that a crop grower generates through the sale of the crop are considered as assessable income.

Benefits of investing in Agribusiness

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.

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

Mezzanine Financing


Mezzanine financing is a combination of debt and equity capital that is given on loan usually to fund company development projects. It gives the lender the right to equity or ownership interest in the company if the leverage is not paid back in full by the maturity date.

Mezzanine financing is usually high priced (with returns around 20 to 30 percent) because the funds are granted without due diligence done by the lender and little or zero collateral from the borrower. Mezzanine funds are generally used in line with bank loans and the borrower's own equity to fund the expansion projects.

Greeks


Various factors that influence option price are termed as “Greeks”. The Greeks helps a trader to understand how much an option is exposed to implied volatility, time-value decay and changes in the underlying price of the asset, usually stocks, shares and other market listed securities. Investors can estimate the level of risk in trading options by using these risk measures. There are mainly four types of Greeks that are usually used to measure risk:

  • Delta
  • Vega
  • Theta
  • Gamma

Delta

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.

Term Deposit


A term deposit is an account held in a financial institution that has a fixed term, generally with maturities ranging from a month to a few years. This means that your funds are tied up. In the event that you need to pull out your money, the banking institution will charge you a fee for breaking the term of your deposit.

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

Leverage


Leverage refers to the borrowed funds or other type of financial instruments that is used to enhance the potential return from an investment. The debt that is used by a company to finance its assets is also known as leverage. If the company has a higher debt in comparison with equity then in such cases that company will be seen as a highly leveraged one.

Leverage for Futures

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.