Trader talk
Sunday June 06, 1999By Liz Garone
STAFF WRITER"Minus 30 since my last short call...PCLN is getting close to a margin call for some who bought above 145," reads a typical posting to an Internet chat room for day traders. "As always, do your DD."
Huh?
Geek speak continues to grow with the advent of day trading, the latest craze to hit the finance world. So, for any casual investors considering a spin on the wilder side -- and we know you're out there -- here's a little trader slang to get you started:
DAY TRADER:
A person who makes daily trades on the stock market. A true day trader is in and out of the market before it closes at the end of the day.Day traders come in all varieties, from the person who quits a day job and trades full-time to the part-time trader who dips in and out of the market every few days. Day traders hold stocks for a few seconds or minutes, sometimes hours.
DD:
Trade chat room jargon for due diligence, making sure to do your homework on stocks before actually buying or selling them.DEAD CAT BOUNCE:
A quick, sudden rise in a stock's price after a big fall.GOING LONG:
Similar to a traditional investment -- but on a hyperactive time frame: You buy into a stock at a low price on the hunch it will go up over the next couple hours, or minutes.GOING SHORT:
The opposite of GOING LONG. Selling stock that you don't own. To go short, you borrow the stock from your broker/dealer. Then you sell it, betting the price will go down and you can buy it back later for less. There is always the risk that the stock price will rise and you will have to buy back the shares you borrowed at a much higher cost.IPO:
An initial public offering. When a privately-held company wants to raise money, one option is to go public by selling shares on the stock market.LIMIT ORDER:
Buying or selling stock at a specified price. Safer than MARKET ORDERS.MARGIN ACCOUNT:
An automatic loan account. Many brokers will allow you to spend twice as much money as you actually have. MARGIN CALL:
If you bet on a stock that's going bad, you will most likely get a MARGIN CALL, which forces you to liquidate the stock and pay back your MARGIN ACCOUNT loan.MARKET MAKER:
A stock wholesaler who tries to match buyers and sellers. Market makers make their profits from the spreads between bidding and asking prices.MARKET ORDER:
A typical stock purchase. You buy stock at whatever the market price is at the time of the order.ONE POINT:
The amount a stock would need to move for a trader to make $1,000 (before commissions and expenses) on 1,000 shares.REAL TIME:
Up-to-the-second prices for stocks. This compares to Internet time, where stock prices and trades can be delayed by minutes. Real time creates an atmosphere similar to that of the actual trading floor. The price you see is the current price -- and, if you move fast enough, the price you get.ROUNDTRIP:
The buying and selling of a certain stock within the same trading day.TEENIES:
A stock price's gain or loss down to one-sixteenth. On 1,000 shares, that one-sixteenth of a point would be a $62.50 loss or gain.