Financial Terms and Definitions » M

Money Market Account

ashivapu — Thu, 24 Dec 2009 04:23:50 +0000

A savings account which shares some of the characteristics of a money market fund and are insured by the Federal government.

Money market accounts offer many of the same services as checking accounts although transactions may be somewhat more limited. These accounts are usually managed by banks or brokerages, and can be a convenient place to store money that is to be used for upcoming investments or has been received from the sale of recent investments.

While they are very safe and highly liquid investments, money market accounts offer a lower interest rate than most other investments.

Margin Call

ashivapu — Tue, 15 Dec 2009 20:56:15 +0000

A broker’s demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin.

You would receive a margin call from a broker if one or more of the securities you had bought (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to sell off some of your assets.

Also called federal margin call or Reg. T Call (for NASD requirements) or house call (for brokerage requirements).

Mergers And Acquisitions (M&A)

ashivapu — Fri, 02 Oct 2009 21:34:05 +0000

A general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.

Public companies that are acquired usually gap up in price because their company is usually bought at a premium, which increases the current price per share value.

Margin

ashivapu — Fri, 02 Oct 2009 21:26:11 +0000

Within investing, margin refers to buying securities with borrowed money, usually supplied by the trader’s broker. The trader believes the stock price will rise, thus, being able to pay back the margin amount plus any potential interest rates and keep gains.

Margin allows traders to leverage their trading power by using more money than they have; however, it can be risky if you lose money because you are required to pay back the entire amount borrowed out of pocket.

Traders must qualify to be eligible for margin accounts.

Mutual Fund

ashivapu — Fri, 02 Oct 2009 04:44:22 +0000

A mutual fund is essentially a collection of money from several investors, which is then invested and managed by some investment firm.

Mutual funds allow you to pool your money alongside other investors and have it managed by some third party. The managers then take all the fund money and invest in a basket of assets. They execute all orders and allow you to experience the returns. While the returns tend to remain constant, higher returns can be seen with individual stocks.

Also see Exchange-Traded Fund (ETF).

The Wild Investor: Should You Buy Individual Stocks?
Speak Stocks: 15 Best No-Load Mutual Funds for 2009 and Beyond

Market Order

ashivapu — Fri, 02 Oct 2009 04:32:27 +0000

A market order is a type of order which indicates you wish to seek an immediate execution for your order at the current market price.

By using this type of market execution, you are letting the price of action being determined by your broker. While these orders are easy to use, there is a downfall. Because you do not specify a stock price, technically the purchase price could be anything.

Speak Stocks: Types of Stock Market Orders

Mid Cap

ashivapu — Fri, 02 Oct 2009 04:18:35 +0000

Refers to stocks with market cap between 2 billion to $10 billion.

Also see market capitalization, small cap, and large cap.

Speak Stocks: Small Cap, Mid Cap, and Large Cap Definitions

Market Capitalization

ashivapu — Fri, 02 Oct 2009 04:15:59 +0000

Market capitalization refers to the total dollar market value of a company’s outstanding shares. Market capitalization is calculated by multiplying a company’s shares outstanding by the current market price of one share. Also known has “market cap.”

Market cap is normally split into 3 categories: Small Cap, Mid Cap, Large Cap

Speak Stocks: Small Cap, Mid Cap, and Large Cap Definitions

Moving Average Crossover

ashivapu — Fri, 02 Oct 2009 00:58:30 +0000

Moving average crossovers are used to confirm the current trend and determine whether a stock has a bullish or bearish sentiment.

A shorter moving average (e.g. 50 SMA) crossing above a longer moving average (200 SMA) is normally considered a bullish sign. On the other hand, a longer moving average (200) crossing above a shorter moving average (50 SMA) is considered bearish.

Further learning - How to use the moving average crossover.

Moving Average

ashivapu — Wed, 12 Aug 2009 02:32:18 +0000

Moving average is an indicator frequently used in technical analysis showing the average value of a security’s price over a set period. Value can be set through your charting program or scanning feature. Moving averages are generally used to measure momentum and define areas of possible support and resistance.

Normally, upward momentum is confirmed when a short-term average (e.g.15-day) crosses above a longer-term average (e.g. 50-day). Also known as a moving average crossover. Downward momentum is confirmed when a short-term average crosses below a long-term average.

Speak Stocks: Moving Averages