| Investment Software – Know the Terminology |
| Written by Nicolas Taylor | |
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To make an educated decision on the best investment software program to use you have to know the terminology and understand the language for both the investment environment and the software niche.
This is a new world for me. As I’m reading up on the options for investment software I feel my eyes cross and my brow furrow. It’s a foreign language and I need a tutorial just on what seems to be the basic lingo. You need to understand not only the software terms like autocomplete, but also the investment language that is full of acronyms, like Forex. If you don’t have a solid grasp of the language you are more likely to make mistakes. And this is one place where mistakes can be costly. My suggestion is to keep a little notebook that you can fill with terms and definitions. Mark a letter of the alphabet at the top every few pages and keep this beside you as you are working on your investments. When you come across a word or acronym you don’t know, write it in the book, Google the definition and write a version that you’ll remember in your notebook. This is just the beginning. As you progress there are actually dictionaries you can download with stock market and accounting terminology. These dictionaries cover an extensive vocabulary of a wide range of investment topics and some come with translation abilities in English, German, French, Italian, Russian, and Spanish. But to start, looking up the word you don’t know, writing it down and referring to it once and awhile are all teaching tools that will help you remember this new language. This is your vocabulary sheet to the investment world. I’ve got a few options to get you started. In no particular order: Acronym - An acronym is a word made out of initials or parts of several words. For instance FOREX, or Forex, is Foreign Exchange. NASDAQ – The NASDAQ Stock Market or just, NASDAQ, is an American stock exchange. This acronym originally stood for National Association of Securities Dealers Automated Quotations. Today this “word” is used to describe the ticker symbol of stocks that are listed on this particular exchange. For instance, NASDAQ:COKE means that COKE is what you will use to look up the price per share for Coca cola stock on the NASDAQ market. OTC – Is an acronym for Over The Counter. Traditionally this term was used to describe securities transactions that are made via telephone and computer rather than on the floor of an exchange. With investment software and online trading, OTC is a specific designation that is usually handled differently from NASDAQ stocks. You may or may not be able to follow and track OTC traded securities. If this is important to you, verify what you can do. If this is online trading software, you may or may not be able to buy or sell OTC securities, so again, verify the options. Penny Stocks – Penny Stocks in the US are commons stocks that trade from a penny a share up to five dollars a share. These stocks are traded over the counter (OTC) through quotation services and may or may not be available to track, trade, or screen via investment software. Check specific software options to make sure. Forex or Foreign Exchange – Forex or foreign exchange market is a worldwide currency market. This market is used to trade currencies. Bull vs Bear Market – A simplistic explanation of these financial terms is that a bull market and bear market are used to describe up and down stock market trends. A bull market is going up and is thought to signify that investors are confident; a bear market is going down and signifies caution or worry. Stock Prices – This is the price set per share of stock. In order for a stock to be listed on the NASDAQ stock exchange, the stock needs to be valued at $1 or up for each share. If the stock is valued at less than a dollar, it is listed as an OTC or over the counter stock. Autocomplete – Autocomplete as a term used by investment software, refers to completing sell or buy orders without human intervention. In other words, you set the software to sell a specific stock when it reaches the price of $100. Once the stock reaches that point, the software program issues the sell order without asking for your approval. Price to earnings ratio or P/E - Price to earnings ratio allows you measure the amount you paid for one share of stock with the annual net income or profit earned by the company per one share. This measurement is used to evaluate how a stock is doing. A stock with a higher P/E number means the stock is more expensive compared to one with a lower P/E ratio. A P/E ratio is figured like this: if a stock is priced at $24 per share, and the earnings per share for the most recent year is $3, then the stock has a P/E ratio of 24/3 or 8. The company made $8 of profit for every share out there. Well, this is a start. There are so many terms to learn and commit to memory. Let this small vocabulary sheet get you started in the world of investment software and investments. |
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