Penny Stocks Definitions

Penny Stock: Penny Stock, officially refers to stocks whit a price per share below $1.00. However, the expression is used on stocks priced between $0 and $15-$20 per share. Penny stocks are often considered as a risky investment due to their volatility and the fact that general public often misunderstands them.

Stocks: A stock represents a type of security that implies ownership in a corporation and offers the holder part of the corporations assets and earnings.

Types of stocks: Preferred and common.

Share: Share are unit of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits.

Instrument: An instrument refers to anything you can trade on the market, which includes securities, commodities, derivatives or index. Simply put, anything that can be traded on the stock market is an instrument.

Symbol: The symbol represents a unique combination of letters assigned to a security varies from market to market.

Small Cap : A small cap is a stock whit a small market capitalization. Its generally considered to include companies whit a market capitalization between $300M and $2B. Small caps are often the trading instruments of pennystocking because big investors and hedge funds prefer to focus on larger markets.

Micro Cap: Like small cap, micro cap regroups companies with a market capitalization between $50M and $300M.

SEC: The U.S Securities and Exchange Commission.

Trading hours: The trading session is between 9:30 am and 4 pm. Eastern Time

After Hours Trading : Some exchanges allow trading outside of regular trading hours. This is called after/hours trading and stocks can trade up to 8 pm. Eastern time.

Pre-Market: Pre-market refers to trading that happens after hours before the market opens for the day session, usually beginning at 8 am. Easter Time, although some orders on truly hot penny stocks have been know to get executed starting at 7 am Easter time.

After Market: Trading that happens after hours after the market closes for the day session.

Session: This represents the trading day during trading hours.

Quote: The last price at which a security traded. Simply put, its the most recent price at which a buyer and seller agreed to make a trade.

Price or Last Price: The monetary value of a security share in the market currency. Its basically the price that you pay for a single share for any given stock.

Bid: The highest value currently on record that a buyer is willing to pay for a single share of a stock.

Ask: The lowest value currently on record that a seller is willing to accept for a single share of a stock.

Bid and Ask Sizes: The number of shares desired respectively for bids and asks.

Spread: The difference in price that exists between the bid price and the ask price.

Open: The initial price at which any given stock is traded during the session. This can also be applied to various time frames, such as minutes, hours, days, etc.

Close: The Last price at which any given stock is traded during the session. This can be applied to various time frame, such as minutes, hours, days etc.

High of Day : The highest price at which the stock has traded for the current sessions. The HoD does not include after/hours trading values.

Low of the Day: The lowest price at which the stock has traded for the current sessions. The LoD does not include after hours trading values.

52 Week High: Similar to high day, representing the highest value over a period of 52 Weeks or one year.

52 Week Low: Similar to low of day. Represents the lowest value over a period of 52 Weeks, or one year.

Day Range or Price Range: The difference in price between the high of day value and the low of a day value. This represent how much the stock price has moved during the current session.

Volume: The number of shares being traded for any given stock during the trading session.

Liquidity: Liquidity is dependent on the volumen. A liquid stock is considered to be a stock that has a high volumen, or more specifically, a stock that trades a high number of shares during session. The concept of liquidity varies but usually considered stocks v higher than 100,000-200,000 shares.

Volatility: Volatility is directly dependent on the day range or price range. Higher volatility usually indicates riskier stocks, as they have a tendency to have bigger price ranges in a short period of time.

Moving Average: Various averages (price, volumen, range, etc) that can be performed on any given stock. Each point in the moving average represents the average of all values within its parameters before the point. Moving average change as the condition of any given stock evolve.

Average True Range: A moving average the focuses on the day range over a given period of time. It is often used as a volatility measurement tool.

Buy: The action of trading money for the ownership of a share.

Sell: The action of trading the ownership of share for its monetary value.

Short Sell: Borrowing shares to trade the ownership of those shares for a monetary value.

Buy to cover: The converse action of short selling. The action of buying back borrowed shares at the indicated price.

Short Squeeze: An event that forces shorts sellers to cover for various reasons.

Trade: The action of buying, selling, short selling or buying to cover.

Position: The ownership of shares in any given stock.

Open position: A position is open when the shares are acquired through the process of buying, or owing shares in the case of a short sale.

Closed Position : A position is closed when the shares are liquidated through the process of selling, or returning shares when buying to cover.

Entry or Entry Price: The price at which a position was opened.

Exit or Exit Price: The price at which a position was closed.

Fill: When an order has been completely executed. In simpler terms, when you place an order for a certain number of shares, if the order goes through for all your shares, the order is filled.

Chart: The visual representation of the price, volume of any given stock over time.

Candlestick : A chart that provides a distinct visual representation of the price changes in stock, clearly indicating the opening price, closing prince, high of the bar, low of the bar.

Trend line: A complement to basic charts that indicate values within which the stock price remains for a certain period of time. It can help determine various potential behaviors of the stock.

Support: A type of trend line above which the price remains for a certain period of time without being crossed.

Resistance: A type of tren line below which the price remains for a certain period of time without being crossed.

Breakout: What occurs when a resistance line is crossed and the price of a stock increases in a very quick manner.

Breakdown: What occurs when a support line is crossed and the price of a stock falls in a very quick manner.

Intraday: Events happening within a given trading session.

Market maker: A broker dealer firm that takes the risk of holding a certain number of shares of a given stock or security with the goal of facilitating the trading of that stock.

Level 2: A trading service that offers real-time data in terms of quotes and market depth. This allows traders to see which market are in queue with bid and ask orders at any given point in time for any given stock.

Pump and Dump: Paid promotions for companies without a real product or any real value for investors. These promotions tend to hike the price before encountering a dramatic drop.

SEC Halt: The temporary suspension of a stock on one or more exchanges.

Promoter: An individual or corporation that actively promotes a security with the intent of pumping the stock price to a higher point.

Morning Panic: When shareholders mass sell orders from interested buyers in order to take profits following an event that affects the price of the stock positively and therefore increasing the underlying demand.

Afternoon Spike panic: These are the same as their morning counterparts, but happen in the afternoon.

Fade: When a stock price slowly decreases from its highs. Usually observed after a spike.

Dip: A sudden decreases in price value for a givens stock following a spike. Usually followed by a recovery increase of the price that may rise or surpass the previous high in some cases.

Bounce: A sudden increase in price value for a stock following a panic. Usually followed by a decrease of the price that may drop or go below the previous in some cases.

Momentum: Created when a large number of traders behave in the same manner when it comes to trade stocks. Often the cause for major variations in price.

Chasing: Attempting enter a position after the initial momentum has already spiked the stock price dramatically.

Scalping: Quickly entering and exiting positions whit small profits of just few cents per share.

Gap up\down: A stock gaps up\down when there is a significant difference in price between the previous day close and the current day open.