Few preliminary basic terms of Trading

When you will trade or read about stocks and stock market, you will come across a few common words. I did not mention them in my last tutorials Few questions you need to ask yourself before your first step in stock market, Basic Terms of Stock Market, Basic Terms of Investment and Trading, Basic FAQs for the beginners in stock markets . As I thought these would not be necessary, but yesterday someone asked me about them and it reminded me that, when someone starts thinking about stocks or share market these words and terms come first in their mind and these terms could be really confusing sometimes. In this article I am going to discuss about them.

For this tutorial I will use Chart Infinities information tab about Facebook Inc’s EOD information, so it would be easier to understand. The picture might look bit different to you as it has more information than usual and the image is not taken from any stock exchanges website. It is a smaller part of our very own Chart Infinities. After end of a trading day Facebook’s stock information given below:

What is EOD?
EOD stands for end of the day. After a trading day is over the information we get about a share, we call it EOD information or data.

What is stock exchange or stock market?
In a simple word where stocks or shares are traded, that place is called stock exchange or stock market.

What is an Index?
Every stock exchange creates several lists of companies, depending upon their functions, size, sector and reputation. Those lists are called indices. For an example bank index will hold list of all banks currently traded in a particular stock exchange. An index reflects weighted average of the listed shares.

What is the stock code?
Every stock or share which are traded in stock exchange, has an unique short code like a nick name given by the exchange. If you know the code then you have to enter the code on stock exchanges website and you will get the details about that particular stock. In this case you not need to enter the entire name of the company. Stock code also helps you to distinguish stocks. A company might have several types of shares listed in an exchange. All stock might bear same name, however the codes would be different.

What is Last Traded date?
Last traded date shows when was the last time the stock was traded in a stock exchange. In our case I took the image on 12th July,2018 before stock market closing, hence it is reflecting 11th July.

What is LTP or CMP or Last Trading Price?
Last trading price/point or LTP reflects last price of a particular stock in a trading day. If stock market is open, then LTP means the current price of the stock or current market price (CMP). Since we are studying EOD data, closing price is our LTP. In our case the stock price of Facebook was $202.54 at the time of stock market closing.

What does the arrow indicates?
The arrow indicates if the stock traded or trading in profit or loss. Green arrow means the stock price is increasing and red arrow means the stock price is decreasing. The arrow reflects change percentage information graphically.

What is change?
Change is comparison between current and previous price of a stock. If we calculate change on EOD data then we would calculate against LTP and previous close price. If we calculate change on Intra day data then we would calculate against CMP and previous close.

How to calculate change?
Calculating change is very easy. The formula is

LTP/CMP - Prev Close=Change

Last Trading Price(LTP) or Current market price (CMP) minus Previous closed price, which is (LTP -Previous Closed) = Change. In our case LTP was 202.54 and the stock previously closed at 203.54. Now the calculation would be

( $202.54 – $203.54) = -1.00.

And now you can see that our calculation and server generated calculation both are same.

What is change percentage?
This is the most important point every trader and investor look for. Change percentage shows us what is actually going on with a particular stock. Change percentage is more important than change value, because change reflects only the change price and it does not reflects the actual growth. Change percentage is the best growth indicator for any stock.
Imagine XYZ co’s LTP is $11 at the end of the day and the stock closed at $10 last day. If we calculate change we will be only $1. Which might seem not significant growth, however if we calculate change percentage, it will show us 10% change. Hence it is the real indicative of a stock's growth.

How to calculate change percentage?
Calculating change percentage is little bit different in compare to change calculation. The formula is total change multiply 100 divided by previous closed price or

{(Change*100)/Previous Closed}= Change Percentage.

So if we try to manually calculate as above picture, it would be like this

{(-1*100)/203.54} = (-100/203.54) = −0.491303921.

Now lets round off the figure and becomes -0.49%.

What is Open or Open Price?
First traded price in a given trading day is open or open price. In our case on 11th July,2018 Facebook started trading at $202.22, so we see open price is $202.22 for that day.

What is High?
The maximum point or price of a stock or index during a particular trading day is called high or day high. In our case Facebook’s day high was $204.50 and it explains that highest stock price of Facebook was $204.50 on 11th July,2018.

What is Low?
It is exactly the opposite of day high. The minimum price or point of a stock during a trading day is Low or day low. In our case Facebook’s day low was $201.75 and that means lowest stock price of Facebook was $201.75 on 11th July,2018.

What is Close?
When a stock market closes, the last trading price/point of a particular stock or index is closing price/point. Many stock exchange displays closing price different than LTP. Since our data source does not provide LTP information, we indicate closing price as LTP. In our case the stock price of Facebook was $202.54 at the time of stock market closing.

What is Adjusted Close?
Many times a company can issue dividend or split shares during a trading day, on that point of time share price get affected for that action. Hence stock exchange adjusts the stock’s closing price as per requirements. In our case Facebook did not take any action on 11th July,2018 therefore closing price and adjusted close price is the same.
Lets assume Facebook issued dividend of $2 on 11th July, in that case closing price of Facebook would have been Closing price+$2, in our case 202.54+$2=204.54. If Facebook had issued any dividend in that case NASDAQ would have adjusted the closing price by reducing $2. So, the adjusted closing price would have been $202.54.

What is Previous Closed?
Previous closed price or point indicates at previous day's closing point or price. In our case it is 203.54. It means prior to 11th July, closing stock price of Facebook was $203.54.

What is TQTY or Trade Quantity?
Trade quantity reflects total amount of share traded in a trading day. In our case on 11th July 12927377 shares of Facebook were traded in NASDAQ.

What is TVAL or Trade Value?
We have not included trade value in above image. However you can see trade value in the website of the stock exchange. It reflects the total amount money in a day, the stocks were traded for.

What is 52 weeks or Year high?
It indicates the highest price or point of a stock or index during one year or 52 weeks. In our case it is $205.80 and it means during last 52 weeks highest stock price of Facebook was $205.80 .

What is 52 weeks or Year low?
It is the opposite of year or 52 weeks high. 52 weeks low reflects lowest point or price of a stock in last 52 weeks. In our case it is $149.02. It means during last 52 week lowest stock price of Facebook was $149.02.

When we call points and price?
For indices we calculate the values in points. So Nifty, Sensex, Nasdaq, Dow Jones, Nikkei, Hang Seng, Shanghai Composite, DAX, CAC, FTSE etc these are indices, so we would call the values as points. For any general stock or equity shares we call the values as prices.

There is another beginner tutorial Basic homework for beginners for stock market. After that you can read advanced tutorials on How to read Candlestick Chart without any complication, How to calculate support and resistance level, How to read financial report or Balance-sheet, When Why and How stock price changes, and Few things need to care about while trading.

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