Brokerage house clerical operations that support, but do not include, the trading of stocks and other securities. Includes all written confirmation and settlement of trades, record keeping and regulatory compliance.

A mutual fund that charges investors a fee to sell (redeem) shares, often ranging from 4% to 6%. Some back-end load funds impose a full commission if the shares are redeemed within a designated time, such as one year. The commission decreases the longer the investor holds the shares. The formal name for the back-end load is the contingent deferred sales charge, or CDSC.

This is a fund that buys common stock, preferred stock and bonds.

also called the statement of financial condition, it is a summary of the assets, liabilities and owners' equity.

A short-term credit investment created by a non-financial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts from face value in the secondary market. These instruments have been a popular investment for money market funds. They are commonly used in international transactions.

On a daily bar chart, each bar represents one day's activity. The vertical bar is drawn from the day's highest price to the day's lowest price (the range). A tic to the left of the bar marks the opening price; while a tick to the right of the bar marks the closing price

A simple calculation that takes net income divided by shares outstanding to get per share earnings.

In the bond market, the smallest measure used for quoting yields is a basis point. On (basis point is 0.01 percent of a bond's yield. Basis points also are used for interest rates. An interest rate of 5 percent is 50 basis points greater than an interest rate of 4.5 percent.

An investor who believes a stock or the overall market will decline. A bear market is a prolonged period of failing stock prices, usually by 20% or more. Related: bull.

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The stock of a company recognized as a leader in its industry. For example, IBM is considered a bellwether stock in the computer field. Often, the fortunes of an industry are reflected in the behavior of its bellwether stocks.

The performance of a predetermined set of securities, for comparison purposes. Such sets may be based on published indices or may be customized to suit an investment strategy.

Also called the base interest rate, it is the minimum interest rate investors will demand for investing in a non-Treasury security. It is also tied to the yield to maturity offered o a comparable- maturity Treasury security that was most recently issued ("on-the-run")

This measures the volatility of a share of stock. A high beta stock, for example, will rise more in value than the stock market average on a day when shares in general are rising. And it will fall more sharply than the average on a day when shares are falling. The Standard & Poor’s 500 Index of stocks, an index that represents large-company stocks, has a beta of 1.

This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically speaking, this is the available price at which an investor can sell shares of stock.

A nickname for the New York Stock Exchange. Also known as "The Exchange". More than 2,500 common and preferred stocks are traded. Founded in 1792, the NYSE is the oldest exchange in the United States, and the largest. It is located on WE Street in New York City.

A model for pricing call options based on arbitrage arguments that uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the standard deviation of the stock return.

A large trading order, defined on the New York Stock Exchange as an order that consists of 10,000 shares of a given stock or a total market value of $200,000 or more.

A steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen in charts and used in technical analysis of stock price and market trends.

Bonds are debt and are issued for a period of more than one year. The U.S. government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically.

Designing a portfolio so that its performance will match the performance of some bon, index.

Book to bill is the semiconductor book to bill ratio. It reports on the amount of semiconductor chips that are booked for delivery as compared with those that companies already have billed for.

A company's book value is this: total assets minus intangible assets and liabilities such as debt. A company's book value might be more or less than the market value of the company.

A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks.

This is one of those technical terms you might hear mentioned in a trading room. It simply demonstrates how broadly a market is moving. When three-quarters of the stocks on the New York Stock Exchange, for example, rise during a given day, an observer might say the stock market had good breadth. Often, observers will measure the number of stocks advancing against the number declining as one-way of monitoring breadth.

A price gap that forms on the completion of an important price pattern. A breakaway gap usually signals the beginning of an important price move.

Price pattern in which today's closing price is the highest in the past 50 trading days and in which today's trading range is the largest in the past nine trading days. Bearish breakouts mirror this action. A breakout is taken to signify a continuing move in the same direction; however, breakouts very often "rest" before continuing their trend be on the lookout for small pullbacks.

An individual who is paid a commission for executing customer orders. Either a floor broker who executes orders on the floor of the exchange, or an upstairs broker who handles retail customers and their orders.

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An investor who thinks the market will rise.

Any market in which prices are in an upward trend.

A spread strategy in which an investor buys an out-of-the-money put option, financing. it by selling out-of-the money call option on the same underlying.

Also called the broker loan rate, the interest rate that banks charge brokers to finance margin loans to investors. The broker charges the investor the call money rate plus a service charge.

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This security gives investors the right to buy a security at a fixed price within a given time frame. An investor, for example, might wish to have the right to buy shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment.

A form of Japanese charting that has become very popular in the US. A narrow line (shadow) shows the day's price range. A wider body marks the area between the high and close. If the close is above the open, the body is white; if the close is below the open, the body is black.

An economic theory that describes the relationship between risk and expected return, and serves as a model for the pricing of risky securities. The CAPM asserts that the only risk that is priced by rational investors is systematic risk, because that risk cannot be eliminated by diversification. The CAPM says that the expected return of a security or a portfolio is equal to the rate on a risk-free security plus a risk premium.

When a stock is sold for a profit, it's the difference between the net sales price of securities and their net cost, or original basis. If a stock is sold below cost, the difference is a capital loss.

A method of constructing a replicating portfolio in which the manager purchases a number of the largest-capitalized names in the index stock in proportion to their capitalization.

Also called financial leverage ratios, these ratios compare debt to total capitalization and thus reflect the extent to which a corporation is trading on its equity. Capitalization ratios can be interpreted only in the context of the stability of industry and company earnings and cash flow.

In investments, it represents earnings before depreciation, amortization and non-cash charges. Sometimes called cash earnings. Cash flow from operations (called funds from operations) by real estate and other investment trusts is important because it indicates the ability to pay dividends.

Futures contracts, such as stock index futures, that settle for cash, not involving the delivery of the underlying.

CDs, as they are called, pay interest to investors for as long as five years.

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Straight lines drawn parallel to the basic trend line. In an up trend, the channel line slants up to the right and is drawn above rally peaks; in a downtrend, the channel line is drawn below price troughs and slants to the right. Prices will often meet resistance at rising channel lines and support at falling channel lines.

A not-for-profit corporation owned by its members. Its primary functions are to provide a location for trading futures and options, collect and disseminate market information, maintain a clearing mechanism and enforce trading rules.

A member firm of the Clearing House. Each clearing member must also be a member of the exchange. Not all members of the exchange, however, are members of the clearing organization. All trades of a non-clearing member must be registered with, and eventually settled through, a clearing member.

A process of matching purchases and sales settles an adjunct to a futures exchange through which transactions executed its floor. A clearing organization is also charged with the proper conduct of delivery procedures and the adequate financing of the entire operation.

The period at the end of the trading session. Sometimes used to refer to closing price

A closed-end fund sells a fixed number of shares to investors. Those shares sell on a exchange and vary in price, depending on demand for the fund. A fund's shares, for example, can trade below their net asset value or above their net asset value depending on investors' demand for the shares. Country funds that represent shares in a specific country or region, such as Germany or France, are often closed-end funds.

A transaction in which the seller's intention is to reduce or eliminate a long position in stock, or a given series of options.

Also known as the range. The high and low prices, or bids and offers, recorded during the period designated as the official close.

A statistical technique that identifies clusters of stocks whose returns are highly correlated within each cluster and relatively uncorrelated between clusters. Cluster analysis has identified groupings such as growth, cyclical, stable and energy stocks.

A security backed by a pool of pass-throughs, structured so that there are several classes of bondholders with varying maturities, called tranches. The principal payments from the underlying pool of pass-through securities are used to retire the bonds on a priority basis as specified in the prospectus.

A bond in which the issuer (often a holding company) grants investors a lien on stock! Notes, bonds, or other financial asset as security. Compare mortgage bond.

Short-term unsecured promissory notes issued by a corporation. The maturity of commercial paper is typically less than 270 days; the most common maturity range is 30 to 50 days or less.

The fee paid to a broker to execute a trade, based on number of shares, bonds, options and/or their dollar value. In 1975, deregulation led to the creation of discount brokers, who charge lower commissions than full service brokers. Full service brokers, offer advice and usually have a full staff of analysts who follow specific industries. Discount brokers simply execute a client's order -- and usually do not offer an opinion on a stock. Also known as a round-turn.

A commodity is food, a metal or another physical substance that investors buy or sell, usually via futures contracts.

These are securities that represent equity ownership in a company. Common shares let an investor vote on such matters as the election of directors. They also give the holder a share in a company's profits via dividend payments or the capital appreciation of the security.

To purchase enough of the available supply of a commodity or stock in order to manipulate its price.

A measure of investors’ faith in the economy and the securities market. Many technical analysts as a bear’s sign consider a low or deteriorating level of confidence.

The written statement that follows any "trade" in the securities markets. Confirmation is issued immediately after a trade is executed. It spells out settlement date, terms, commission, etc.

The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S. Department of Labor publishes the CF every month.

The stock of a company that produces consumer-oriented products like food, beverages, tobacco, pharmaceuticals.

A term of reference describing a unit of trading for a financial or commodity future. Also, the actual bilateral agreement between the buyer and seller of a transaction as defined by an exchange.

The month in which futures contracts may be satisfied by making or accepting a delivery. Also called value managers, those who assemble portfolios with relatively lower betas, lower price-book and P/E ratios and higher dividend yields, seeing value where others do not. Related: delivery month contrarians

The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is higher because of the time value. But as the contract nears expiration, the futures price and the cash price converge.

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The number of shares of common stock that the security holder will receive from exercising the call option of a convertible security.

Bonds that can be converted into common stock at the option of the holder.

Preferred stock that can be converted into common stock at the option of the holder. Preferred stock that can be converted into common stock at the option of the holder.

Debt obligations issued by corporations.

The purchase of a contract to offset a previously established short position

A short call option position in which the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally limit the risk the writer takes because the stock does not have to be bought at the market price if the holder of that option decides to exercise it.

A strategy that involves writing a call option on securities that the investor owns in his or her portfolio. See covered or hedge option strategies.

is  any market or limit order received and executed during normal business hours (9:30am-4:00pm) including an immediate  or cancel order but excluding any order in which the client provides special instructions.

A put option position in which the option writer also is short the corresponding stock o has deposited, in a cash account, cash or cash equivalents equal to the exercise of the option. This limits the option writer's risk because money or stock is already set aside. In the event that the holder of the put option decides to exercise the option, the writer's risk is more limited than it would be on an uncovered or naked put option.

are any National Market System security and any other security for which a transaction report, last sale data, or quotation information is disseminated through an automated quotation system (AQS) including Exchange-Listed securities, Nasdaq National Market and SmallCap securities. It would not include Exchange-Listed Options and OTC Bulletin Board (OTCBB) Securities.

An accumulation pattern observed on bar charts. The pattern lasts from seven to 65 weeks; the cup is in the shape of a "U" and the handle is usually more than one or two weeks in duration. The handle is a slight downward drift with low trading volume from the right-hand side of the formation.

This shows the currency that a security trades in, such as USD for U.S. dollar.

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If a security has a dividend, the yield is the price of a stock dividend. A $10 stock that pays a 50 cent dividend for the year has a 5% yield.

The stock of a company whose fortunes are closely tied to the cyclical ups and down,, of the economy in general. For example, General Motors is a cyclical stock since its business of selling autos is highly dependent on a robust economy with its attendant high levels of employment, rising personal incomes, etc.

This is the highest price that a security has traded at during the day.

An order to buy or sell stock that automatically expires if it can't be executed on the day it is entered.

A Pattern Day Trader is any client who executes four (4) or more day trades (purchasing & selling or selling and purchasing the same security) within five (5) business days, unless the trading activity does not exceed six (6) percent (%) of the account's total trading activity for the five (5) day period. (SEC/Rule 2520 Sept. 28, 2001 /also check Min. Equity Requirements & Day Trading Buying Power)

Refers to establishing and liquidating the same position or positions within one day's trading.

The amendments provide for buying power up to four (4) times margin maintenance excess in a pattern daytrader's margin account (Min. Equity Requirement: The amendments require that a pattern day trader maintain minimum account equity of $25,000/ SEC/Rule 2520 Sept. 28, 2001)

This is the lowest price that a security has traded at during the day.

An entity that stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price).

This is an "options/options" or "options/underlying instrument" position constructed so that it is relatively insensitive to the price movement of the underlying instruments. This is arranged by selecting a calculated ratio of offsetting short and long positions.

A measure of option price vs. the underlying futures contract or stock price.

Contracts such as options and futures whose price is derived from the price of the underlying financial asset.

A mutual fund's return minus the change in the Standard & Poor 500 Index for the same time period. A notation of -5. 00 means the fund return was 5 percentage points less than the gain in the S&P, while 0. 00 means that the fund and the S&P had the same return.

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A calculation that includes stock options, warrants and convertible securities to get per-share earnings.

This indicator, called DMI, plots a positive +DI line measuring buying pressure and a negative -DI line measuring selling pressure The pattern is bullish as long as the +DI line is above the -DI line. The formula utilized the past 14 time periods) The ADX line is derived from this system and is based on the spread between the +DI and -DI lines.

This is the interest rate charged by the U.S. Federal Reserve, the nation's central bank, for loans to member banks. The Fed, as it is called, alters rates to increase or decrease the growth of the nation's economic output.

Accounts over which an individual or organization, other than the person in whose name the account is carried, exercises trading authority or control.

This is another way of saying: professional selling. A stock is under distribution when volume expands on days when price moves down.

When two or more averages or indices fail to show confirming trends.

A dividend is a portion of a company's profit paid to common and preferred shareholders. A stock selling for $20 a share with an annual dividend of $1 a share yields the investor 5 percent.

The price pattern displays two prominent peaks. The reversal is complete when the middle trough is broken. The double bottom is a mirror image of the double top.

This is the best-known U.S. index of stocks. It contains 30 stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing. There are thousands of investment indexes around the world for stocks, bonds, currencies and commodities.

One of the oldest and most highly regarded technical theories. A Dow theory buy signal is given when the Dow Industrial and Dow Transportation Averages close above a prior rally peak. A sell signal is given when both averages close below a prior reaction low.

A straight line drawn down and to the right above successive rally peaks. A violation the downtrend usually signals a reversal of the downtrend.

A strategy that involves rebalancing hedge positions as market conditions change; a strategy that seeks to insure the value of a portfolio using a synthetic put option.

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Net income for the company during the period.

EPS, as it is called, is a company's profit divided by its number of shares. It a company earned $2 million in one year had 2 million shares of stock outstanding, its EPS would be $1 per share.

The ratio of earnings per share after allowing for tax and interest payments on fixed interest debt, to the current share price. The inverse of the price/earnings ratio. It's the Total Twelve Months earnings divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is shown in percentage.

Positive or negative differences from the consensus forecast.

The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit company documents such as 10-Qs, or quarterly reports, to investors.

In an interest rate swap, the date the swap begins accruing interest.

The financial markets of developing economies.

An intuitive indicator of the three-week trend. Stocks moving up 10% or more in that period are given a Green or Trending Up rating. Stocks moving down 10% or more during that period are given a Red or Trending Down rating. Stocks between + 99/o during that period are given a Yellow or Range Bound rating.

The residual dollar value of a futures trading account, assuming its liquidation at the going market price.

An agreement in which one party agrees to pay the other at specific time periods if a specific stock market benchmark is less than a predetermined level.

This is an American dollar that has been deposited in a European bank. It got there a: a result of payments made to overseas companies for merchandise.

Option that may be exercised only at the expiration date.

The process of completing an order to buy or sell securities. Once a trade is executed it is reported by a Confirmation Report; settlement (payment and transfer of ownership) occurs in the U.S. between 1 (mutual funds) and 5 (stocks) days after an order is executed. Settlement times for exchange listed stocks are in the process of being reduced to three days in the U. S.

The first day of trading when the seller, rather than the buyer, of a stock will be entitle to the most recently announced dividend payment. This date set by the NYSE (and generally followed on other US exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is marked with an x in newspaper listings on that date.

There are three main U.S. stock exchanges on which securities are traded. AMEX is the American Stock Exchange. NASDAQ is the National Association of Securities Dealers. NYSE is the New York Stock Exchange.

A price gap that occurs at the end of an important trend, and signals that the trend is ending.

The last day (in the case of American-style) or the only day (in the case of European style) on which an option may be exercised. For stock options, this date is the Saturday immediately following the 3d Friday of the expiration month; however, brokerage firms may set an earlier deadline for notification of an option holder's intention to exercise. If Friday is a holiday, the last trading day will be the preceding Thursday.

A moving average is a method of calculating the average value of a security's price, c indicator, over a period of time. An exponential (or exponentially weighted) moving average is calculated by applying a percentage of today's closing price to yesterday's moving average value.

This is the highest price that a security has traded at during the last 52 weeks.

This is the lowest price that a security has traded at during the last 52 weeks.

The equilibrium price for futures contracts. Also called the theoretical futures price.

A trading order that is canceled unless executed within a designated time period.

Assets that pay a fixed-dollar amount, such as bonds and preferred stock.

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A member who is paid a fee for executing orders for clearing members or their customers. A floor broker executing customer orders must be licensed by the CFTC.

The opposite of visual or technical analysis Fundamental analysis relies on economic supply and demand information, as opposed to market activity.

This is an agreement that allows an investor to buy or sell a commodity, like gold or wheat, or a financial instrument, like a currency, at some time in future. A future is paid of a class of securities called derivatives, so named because such securities derive their value from the worth of an underlying investment.

Are spaces left on the bar chart where no trading has taken place. An up gap is formed when the lowest price on a trading day is higher than the highest high of the previous day. A down gap is formed when the highest price on the day is lower than the lowest price of the prior day. An up gap is usually a sign of market strength, while down gap is usually a sign of market weakness. However, gaps must be studied very closely, as gaps may also be reversal indications. Three types of gaps are breakaway~ runaway, and exhaustion gaps.

Sometimes simply called "GTC", it means an order to buy or sell stock that is good until you cancel it. Brokerages usually set a limit of 30-60 days, at which the GTC expires if not restated.

The stock of a company whose business is considered recession-resistant and also possesses an above-average growth rate.