Glossary
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1. Accumulation
If used in the context of Technical Analysis, it is the base pattern on a chart where strong long terms holders buy-under valued securities for the purposes of holding them until a subsequent mark up phase has occurred. Strong holders are usually professionals while weak holders are the general public.
2. Accumulation Fund
A type of superannuation fund where the end total is equal to the total contributions plus the interest credited from the invested securities less any charges, fees and tax payable.
3. Allocated Pension
Allocated Pensions are a form of income stream which are paid out until the account total has exhausted. These pensions are paid out from a pre-determined period and generally speaking you can withdrawal from the pension as a lump sum or a small proportion at any time.
4. American Option
This type of option allows the holder to exercise their right at any given time till expiry.
5. Analysis
The process of examining the detail and structure of a situation in order to recognize the condition of a market.
6. Arbitrage
A strategy used by investors who identify slight price differences between certain markets and use this miss-alignment to buy low, sell high.
7. Ask Price
The price at which a certain party is willing (or asking) to sell a unit of a particular security at. This is the price that you will buy at if you are buying a stock.
8. Asset
Any property which is owned by a person or a company, which is has certain economic value and contains an element of future benefit.
9. At the Market
A term where an investor buys or sells at the best current price in relation any trade executed.
10. At the Money
A term which refers to the strike or exercise price of an option, where the price of the option is very close to the current market price of the underlying asset.
11. Austraclear
Is the Australian organization which acts as an electronic clearing-house for a range of financial transactions.
12. Australian Prudential Regulation Authority (APRA)
Is the Australian regulator and supervisor of authorize deposit-taking institutions and certain non-bank financial institutions.
13. Australian Securities and Investment Commission (ASIC)
Is the Australian regulator body which is responsible for the supervision and enforcement of the Corporations Act which people and organizations abide by.
14. Australian Stock Exchange (ASX)
Is the primary stock exchange in Australia for all shares.
15. Average
The prices for a group of financial instruments are added together and then divided by the total number of instruments in the group. The Dow Jones Industrial Average is the most commonly known average.
16. Basis Risk
An element of risk that exists when there is an imperfect correlation between 2 investments, and therefore creates a pricing difference.
17. Bear Market
A market where the expectations and general consensus of all investors indicate that prices will fall. The opposite or antonym of a bull market.
18. Bear Trap
The situation when a bear market reverses its trend, or the price breaks downward, and bearish investors assume the decline will continue and take out short positions. The price then reverses itself again, and a new up trend is formed with the consequential conclusion being that the bearish investors are trapped on the wrong side of the market and must close out their positions to make a potentially unlimited loss.
19. Beneficiary
A beneficiary is the person who is the recipient of a payment in the form of a trust or superannuation fund. This may change to a persons dependants (such as a spouse or children) in the event of a death of the member.
20. Beta
A Greek symbol which in finance relates to the a measure of volatility, or systematic risk in comparing a certain security(s) or portfolio(s) with the market as a whole.
21. Bid Price
The price at which a certain party is willing (or asking) to buy a unit of a particular security at. This is the price that you will sell at if you are selling a stock.
22. Blue Chip Company
Generally speaking these are the companies which are listed on the stock exchange and have established company and financial structures which generally have strong management. Usually these are the large public companies which hold relatively safer investment opportunities.
23. Board of Directors
A board of directors is elected by the companies' shareholders to represent the best interests of shareholders as a whole. They are required to make decisions on major company issues.
24. Bond
Is an investment where the investor (or issuer) will loan an amount of money to a company or government. The company or government will then borrow this money for a pre-determined amount of time and repay or compensate the issuer at a specified interest rate. The investor will receive the bond or certificate for issuing the bond.
25. Breakout
Technical Analysis phrase for a rise in a securities price above the previous high, or a fall in a securities price below the previous low.
26. Broker
Is an individual or company who enables or executes buy and sell orders for investors.
27. Bull Market
A market where the expectations and general consensus of all investors indicate that prices will rise. The opposite or antonym of a bear market.
28. Bull Trap
The situation when a bull market reverses its trend, or the price breaks upward, and bullish investors assume the advance will continue and take out long positions. The price then reverses itself again, and a new downtrend is formed with the consequential conclusion being that the bullish investors are trapped on the wrong side of the market and must long out their positions for a loss.
29. Buyer
A market participant that purchases financial instruments.
30. Call Option
An option which gives the buyer the right, but not the obligation to purchase the underlying asset at a pre-determined price, on or before a specific date. This means that if you hold a call option you can buy the underlying asset, but you do not have to if you do not wish to.
31. Capital Gain
Where the increase value of an asset gives it a higher worth than the purchase price. However this gain is not realized until the asset is sold.
32. Chartist
A term that has been misused for many decades and is now generally replaced by Technical Analyst. A chartist was specifically a person who used charts to draw conclusions about market movement. This was too narrow definition for Technical Analysts and thus it should now be replaced.
33. CHESS
Is the electronic payment and settlement system operated by the ASX.
34. Clearing House
Is an agency or corporation which facilitates the financial settlement and transfer of ownership between buyers and sellers of a stock or futures exchange.
35. Close
The last price that a security trades for during a given period (or trading session).
36. Close Out
The action where the investor liquidates the position which they have open, by taking an equal and opposite position. (i.e. you sell your stock to receive your money back, or you buy the stock back to close out a short position.)
37. Commission
A commission is fee paid to an agent, advisor or financial planner for the transaction or maintenance of a financial product. It is usually based on a percentage amount or fixed price in relation to the total amount invested.
38. Commonwealth Government
The central government which exists in Australia.
39. Company Fund
A company fund is a type of superannuation fund which has been developed by the employer of a company. Its purpose is to pool employee contributions together in an attempt to form a fund which would maximize returns in the best interest of the company's employees.
40. Confirmation
In Technical Analysis, two or more charting signals that imply the same movement. In Market Trading, the written acknowledgment that a securities order has taken place.
41. Continuation
The continuation of a price movement in the same direction as a prior trend.
42. Counterparty Risk
The risk to each party that the counter party, or 'other party', will not be able to fulfill its contractual obligations. Typically, counterparty risk is referred to as 'default risk' since it is the risk that one party is going to default on its obligations.
43. Coupon
Is the payment which relates to the interest received from bonds.
44. Dead Cat Bounce
A term used in the Financial Industry to describe a pattern whereby a massive decline in the price of a stock is quickly followed by a small and short-term rise, before continuing downward. It gets its name from the idea that "even a dead cat will bounce if it falls from a great height".
45. Debenture
Is a secured corporate bond which is a charge over the assets of the issuer. Usually a charge of the company's assets.
46. Debt
Is the state where money is owed or is due. A repayment must be made within a pre-specified date.
47. Dependant
A spouse (including de facto) or child of the member, or any other person who is financially dependant on the member.
48. Depreciation
The decrease in price or value over time in relation to a specific asset.
49. Deregulation
The removal of existing regulatory constraints.
50. Derivative
Is a financial instrument which is based entirely on another security. (i.e. options, futures)
