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and income statement. SEC rules require that it be distributed to all shareholders. A more detailed version is called a 10-K. |
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arbitrage The simultaneous purchase and sale of two differentbut closely relatedsecurities to take advantage of a disparity in their prices. Profiting from disparities in the price of equivalent securities, commodities, or currencies when they are simultaneously traded on more than one market. Buying stock in a company that is the target of a merger or takeover when such action will cause the price of the stock to rise. No arbitrage opportunities would exist in a perfectly efficient market. |
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ascending tops A chart that shows that the price of a security over a period of time has had consecutive peaks, each higher than the previous one. Such a chart may indicate to investors that an upward trend may be expected to continue. |
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ask The current price for which a security may be bought, as in the OTC market. |
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auction market The system of buying and selling securities through exchange brokers with buyers and sellers competing against one another to get the best prices. The NYSE is the prime example. In an auction market, trades are not negotiated as they are in an over-the-counter market. Exchanges like the NYSE and the CBOE are auction markets with the actual trading floors, pits, open outcry, and hand signals. These markets do not guarantee the best price in or out because there never is a true "best price." |
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average directional movement (ADX) An indicator that measures how much a market is trending. Both bullish and bearish trends are shown by positive movement in the ADX. |
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average true range The average, over the last "x" days, of the true range which is the largest of the following: (1) today's high minus today's low; (2) today's high minus yesterday's close; or (3) today's low minus yesterday's close. |
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away from market A limit order bid which is lower, or the offer price is higher, than the stock's current market price. |
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back office Brokerage house clerical operations that support, but do not include, the trading of stocks and other securities. Includes all written confirmation and settlement of trades, recordkeeping, and regulatory compliance. |
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back testing The process of optimizing a trading strategy using historical data and then seeing whether it has predictive validity on current data. |
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bear An investor who believes a stock, a sector, or the overall market will decline (opposite of bull). Bears might sell securities short, hoping to make a profit by subsequently repurchasing at a lower price. |
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bearish An attitude carried by traders who believe prices are headed lower, whether pertaining to a particular stock or the market in general. |
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bear market A bear market is a prolonged period of falling stock prices, usually by 20 percent or more. |
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