STOCK MARKET TERMS RELATING TO TRADING in GENERAL
These stock market terms relate to the practical aspects of
trading options or other securities on the stock market. The terms refer to
buying, selling, placing orders, trading accounts and different types of
After-hours trading refers to buying and selling securities during times
outside of market hours. After hours trades are executed using computer systems
known as ECNs (electronic communication networks). These ECNs match buyers and
sellers in order to facilitate after-hours trading.
Ask (Asked Price)
In trading terms, “Ask,” or “Asked Price” refers to the lowest price at which the
holder will sell a security.
The “Bid,” means the highest price that buyers have indicated they are prepared
to pay for a security.
Buying power is a term used to refer to a margin account. This indicates the highest
dollar value of marginable securities that the client can purchase or sell
short without being required to deposit additional funds.
The ”Close” refers to the price of the final transaction of a security on a
A day order is an order that is open for the duration of the trading day on
which it was placed. A day order then expires at the close of trading on the
same day if it has not been completed.
A day trade involves buying and then subsequently selling the same security
within the same trading day.
Execution means the completion of the trade of a security.
Fill or Kill (FOK)
The term “Fill or Kill” refers to a type of order. Placing this order requires
the immediate execution of the entire order quantity at the specified price. If
this execution is not possible, then the order is cancelled or “killed”
Fundamental analysis is used to evaluate the intrinsic value of a company and
its listed securities. One goal of fundamental analysis is to identify stock
which is undervalued, and therefore may present a worthwhile buying
opportunity. Fundamental analysis examines a company’s financial and
operational data, with particular attention to sales and earnings, management
and growth potential.
Good 'Til-Canceled (GTC)
A “Good ‘Til Canceled” order is an order that will not automatically be
canceled. Once placed, the order will remain open until it is executed or unless
it is canceled by the trading account holder.
An “Immediate-or-Cancel” order is used when a trader requires immediate
execution of a trade at a specific price. This order ensures that as much of
the order as possible will be filled immediately at the stated price, and that
any unfilled portion of the order will then be canceled.
A limit order specifies the highest price that a buyer is willing to pay, or alternatively,
the lowest price that a seller is willing to accept. If the security becomes
available at the price stated on the limit order, or better, it will be
A margin account is an account that provides additional leverage to the account
holder. The brokerage firm allows the holder to use borrowed funds to purchase
eligible securities. Securities held by the account holder are used as
collateral, and therefore, if those securities decline in value, the account
holder will be required to either deposit additional funds, or to sell a
portion of the securities to maintain the stipulated balance.
A market order is an order which specifies immediate execution at the current
A spread in stock market terms refers to the difference between the bid price and the
ask price of a quote.
Stop Limit Order
A stop limit order is similar to a stop-loss order, but is used to trigger the
execution of a limit order when a security reaches or passes a designated
A stop-loss is used to protect a portion of a trader’s investment, and becomes
an order to sell if a price drops to a set point below the price at which the
trade was entered.
Technical analysis involves examining the potential
profitability of stocks using stock market data which can be applied to various
types of charts. There are many different tools and techniques used in
technical analysis, and the study of chart patterns seeks to identify points at
which a price may break out or reverse, or the likelihood of continuation of a