JCSM Shareware Collection 1996 September/JCSM Shareware Collection (JCS Distribution) (September 1996).ISO/bother__/broker.zip/SBDICT.SBF

Text File | 1994-03-07 | 21KB | 547 lines

Advance-Decline Line
Each day's number of declining issues is subtracted from the number of
advancing issues. The net difference is added to a running sum if the
difference is positive or subtracted from the running sum if the
difference is negative.

Annuity
A contract where the buyer (annuitant) pays a sum of money to receive
regular payments for life or a fixed period of time.

Arbitrage
The simultaneous purchase and sale of two different, but closely
related items to a take advantage of a disparity in their prices.

Artificial Intelligence
The field of computer science dedicated to producing programs that
attempt to mimic the processes of the human brain.

Associated Person (AP)
An individual who solicits orders, customers or customer funds (or who
supervises persons so engaged) on behalf of an FCM, IB, CTA or CPO.

AT-THE-MONEY -
A term that says the market price of the stock is the same
as the strike price of the option.

Average Annual Return
The rate of return which, if compounded over the duration of the track
record, would yield the cumulative gain or loss actually produced
during that period.

Back-end Load
The fee paid when withdrawing money from a fund.

Back-Testing
The process of testing a trading strategy on historical data.

Bankers' Acceptances (BAs)
Short-term, non-interest-bearing notes sold at a discount and redeemed
at maturity for full face value. Primarily used to finance foreign
trade.

Basis Point
Term used to describe amount of change in yield. One hundred basis
points equal 1 percent.

Bear Market
A sustained period of falling stock prices usually preceding or
accompanied by a period of poor economic performance known as a
recession. The opposite of a bull market.

Beta
Term used to describe the price volatility of securities. Standard &
Poor's 500 Index is assigned a beta of one. Anything with a beta above
one is considered to be more volatile than the Index; anything below
one has less volatility than the S&P Index.

Boolean
Describes a variable that may have one of only two possible values:
true or false. After George Boolean, English logician credited with the
invention of "Boolean Logic."

Breakaway Gap
The movement of price into a new range that leaves an area on a chart
at which no trading occurred.

Breakout--
The point when the market price moves out of the trend channel.

Bull Market
A stock market that is characterized by rising prices over a long
period of time. The time span is not precise, but it represents a
period of investor optimism,lower interest rates, and economic growth.
The opposite of a bear market.

Call option
A contract that gives the buyer of the option the right, but not the
obligation, to take delivery of the underlying security at
a specific price within a certain time.

Call Price
The price of a call option.

Cancel (or Straight Cancel)
An instruction to disregard an order which you previously entered, but
no longer want.

Cancel/Replace
Instructs the broker to cancel an existing order and place instead a
new order which has adjustments made in the price, action, quantity,
and/or duration. You may not change the month or commodity in a
cancel/replace.

Candlestick Charts--
A charting method, originally from Japan, in which
the high and low are plotted as a single line and are referred to as
shadows. The price range between the open and the close is plotted as a
narrow rectangle and is referred to as the body. If the close is above
the open, the body is white. If the close is below the open, the body
is black.

Commodity Pool Operator (CPO)
An individual or organization which operates or solicits funds for a
commodity pool.

Commodity Trading Advisor(CTA)
An individual or organization who, for compensation or profit, directly
or indirectly advises others as to the value of or the advisability of
buying or selling futures contracts or commodity options.

Correction--
Any price reaction within the market leading to an
adjustment by as much as one-third to two-thirds of the previous gain.

Covered Call Writer --
If an investor owns at least an equal number of
shares of the underlying stock as the number of shares on which he has
written calls, he is said to be a covered call writer.

Curve-Fitting--
Developing complicated rules that map known conditions.

Disregard Tape (DRT)
A DRT order is a market order which gives the floor broker the
discretion to delay the execution of a market order if he believes he
can execute the order at a better price by so doing. DRT orders are
accepted on a "not held" basis only.

Durbin-Watson Statistic--
The probability that first order correlation
exists. With a range of 0 and 4. the closer to 2.0. the lower the
probability is.

Efficient Market Theory --
All known information is already discounted
by the market and reflected in the price due to market participants
acting upon the information.

Elliott Wave Theory
A pattern recognition technique published by Ralph N. Elliott in 1939,
which holds that the stock market follows a rhythm or patten of five
waves up with 3 waves down in a bull market and five waves down with
three waves up in a bear market to form a complete cycle of eight
waves.

Evening Star Pattern--
The bearish counterpart of the morning star
pattern; a top reversal, it should be acted on if it arises after an
uptrend.

Ex-Dividend Date
The date on which stock is sold without dividend. Under the five-day
delivery plan, buyers of the stock on the fourth business day preceding
the stockholder of record date will not receive the declared dividend.

Exercise Price
Amount for which shares can be bought or sold under the option.

Expert Systems--
Dynamic but not adaptable. expert systems are
rule-driven systems that cannot learn as the result of new information
being fed into its system as opposed to neural networks, which can.

Fair Values--
The theoretical prices generated by an option pricing
model (i.e.. the Black-Scholes option pricing model).

Fast Fourier Transform--
A method by which to decompose data into a sum
of sinusoids of varying cycle length, with each cycle being a fraction
of a common fundamental cycle length.

Front-End Load
A sales charge for buying into a mutual fund. The sales charge
typically can run as high as 4.0 to 8.5 percent and legally can be 9.0
percent or more.

Fill or Kill (FOK)
A Fill or Kill order instructs the broker to bid (to buy) or offer (to
sell) at your specified price (which should be at or near the current
market) and to immediately cancel the order if it is unable to be
filled.

Fire--(verb)
In expert system programming, ordinarily used to describe
the "triggering" or "activation" of a rule.
A rule is "fired," "triggered" or "activated" when its conditions have
been met, and its "consequents" (resultant facts) are added to the
knowledge base.

Floor Broker (FB)
An individual who executes any orders for the purchase or sale of any
commodity futures or options contract on any contract market for any
other person.

Floor Trader (FT)
An individual who executes trades for the purchase or sale of any
commodity futures or options contract on any contract market for such
individual's own account.

Fundamental Analysis--
The analytical method by which only the sales,
earnings and the value of a given tradable's assets may be considered.

Fundamentals--
The theory that holds that stock market activity may be
predicted by looking at the relative data and statistics of a stock as
well as the management of the company in question and its earnings.

Fuzzy Systems--
A problem-solving method that can be applied to neutral
networks, expert systems and other computing methods. Fuzzy systems
process inexact information inexactly and describe ambiguity rather
than the uncertainty of an occurrence.

Gap --
A day in which the daily range is completely above or below the
previous day' s daily range.

GNMA (Government National Mortgage Ass'n)
US government agency whose primary function is to buy mortgages or
mortgage purchase commitments and to resell them at market prices to
other investors. It also designs and issues new mortgage-backed
securities. Called "Ginnie Mae."

IN-THE-MONEY -
Simply another way of saying that the option has some
intrinsic value.

Introducing Broker (IB)
An individual or organization that solicits or accepts orders to buy or
sell futures contracts or commodity options but does not accept money
or other assets from customers to support such orders.
Knowledge Base--In artificial intelligence, a given inventory of
knowledge specific to a set of rules.

Leverage
The use of borrowed money with invested funds to increase returns. The
effect is to magnify profits or losses and increase the amount of risk.

Limit
A limit order stipulates a price which the filling broker must equal or
better in the execution of your order.

Limit Order
An order to buy or sell when a trade in the market occurs at a
pre-determined price.

Limit Up, Limit Down
Exchange restrictions on the maximum upward or downward movement
permitted in the price for a commodity during any trading session.

Load
A portion of the offering price that goes toward selling costs such as
sales commissions and distribution.

Locked Limit
A market that, if not restricted, would seek price equilibrium outside
the limit, but instead moves to the limit and ceases to trade.

MACD - Moving Average Convergence/Divergence
The difference between two exponentially smoothed moving averages of
different length (often 12 and 24 period). Technicians often use the
crossing of this value over the zero line to signal buying or selling
opportunities.

Macro--A computer method commonly used in spreadsheets to automate re-
petitive steps by recording necessary keystrokes. The macro can then be
run and the keystrokes will be implemented.  S~

Management Fee
The amount paid to the administrator and or management company (who may
also serve as an investment advisor) for services rendered to the fund
and included in the expense ratio.

Margin
In stock trading, an account in which purchase of stock may be financed
with borrowed-money, in futures trading, the deposit placed with the
clearing house to assure fulfillment of the contract. This amount
varies with market volatility and is settled in cash.

Margin Call
A demand by the lender of a margin loan that the borrower repay all or
a portion of the loan.

Market if Touched (MIT)
An MIT becomes a market order if and when the market hits a price
specified by you. Like limit orders, buy MITs are entered at or below
the current market and sell MITs are entered at or above the current
price. Unlike limit orders, there are no limitations placed on the
floor broker as to fill price - he will execute your order at the best
available price, the same as any market order.

Market on Close (MOC)
An MOC order is a market order which can only be filled within the
closing range.

Market on Open Only (OO)
An open only order us a market order which must be executed within the
official opening range of prices.

Market Order
A market order does not specify a price; rather, it instructs the
filling broker to execute your order at the best price available on
receipt.

Maximum Adverse Excursion
An historical measure of the maximum amount by which closed winning
trades have gone against you.

Maximum Drawdown
(or Largest Cumulative Decline)
The largest cumulative percentage (peak-to-valley) decline in capital
of a trading account or portfolio. This measurement of risk identifies
the worst-case scenario for a managed futures investment within a time
period.

Momentum--
A time series representing change of today's price from some
fixed number of days back in history.

Multiple Linear Regression--
More than one independent variable is used
to account for the variability in one dependent variable.

N.A.V.
Net asset value of shares. The total market value of an investment
company's shares - securities, cash, and any accrued earnings - minus
its liabilities, divided by the number of shares outstanding.

Neural Network--
An artificial intelligence program that is capable of
learning through a training process of trial and error.

Odd Lot
The usual amount when buying shares of stock is 100 shares (a round
lot). When you buy fewer than 100 shares it is called an odd lot.

One-Tailed T-Test--
A statistical test of significance for a
distribution that changes its shape as N gets smaller: based on a
variable t equal to the difference between the mean of the sample and
the mean of the population divided by a result obtained by dividing the
standard deviation of the sample by the square root of the number of
individuals in the sample.

Open Interest --
refers to the purchase or sale commitments that remain unliquidated.
When open interest is high, a great many traders are holding firm to
their positions or entering into new positions; when these traders
decide to compromise and sell, the open interest is reduced.

Options Expiration
Third Friday of the month shown

Or Better Close Only
This is a limit order which is valid only during the closing range.

Order Cancels Order (OCO)
Also called One Cancels the Other This order consists of two separate
buy or sell instructions to the filling broker who will execute
whichever portion of the order he is first able to and then
automatically cancel the alternate instruction.

OUT-OF-THE-MONEY -
If the strike price is higher than the market value of the option.

Outlier--
A value removed from the other values to such an extreme that
its presence cannot be attributed to the random combination of chance
causes.

Overbought/Oversold Indicators--
An indicator that attempts to define
when prices have moved too far and too fast in either direction and
thus are vulnerable to a reaction.

Overfitting--
The parameters of a trading system are selected to return
the highest profit over the historical data.

Over-the-Counter
The nationwide network of brokers/dealers who buy and sell securities
that, for the most part, are not listed on an exchange.

Parameter--
A variable, set of data, or rule that establishes a precise
format for a model.

Program Trading--
Trades based on signals from computer programs.
usually entered directly from the trader' s computer to the market's
computer system.

R-Squared--
The percentage of variation in the dependent variable that
is explained by the regression equation. A relative measure of fit.


Price/Earnings Ratio (P.E.)
The price of the stock, divided by earnings per share reported over the
last four quarters.

Put Option
The right, but not the obligation, to sell shares at the exercise price
on or before the expiration date.

Put Price
Price of a "put" option.

Random Walk--
A theory that says there is no sequential correlation
between prices from one day to the next, that prices will act
unpredictably as they seek a level in response to supply and demand.

Rate of Return
According to CFTC Regulation 4.21 (a)(4)(ii)(F) is calculated by
dividing the net performance for the month or quarter by the net asset
value at the beginning of the period.

Relative Strength Index--
An indicator invented by J. Welles Wilder and
used to ascertain overbought/oversold and divergent situations.

Repurchase Agreement (repo)
A financial transaction in which one party purchases securities for
cash and a second party simultaneously agrees to buy them back in the
future at specified terms.

Resistance--
A price level at which rising prices have stopped rising
and either moved sideways or reversed direction: usually seen as a
price chart pattern.

Saucer Base -- Similar to a cup and handle formation, but the saucer
base is more shallow and rounder in shape.

Secular Trend--
Pertaining to a long indefinite period of time.

Spike --
A sharp rise in price in a single day or two; maybe as great
as 15-30%, indicating the time for an immediate sale.

SPREADS -
Involve being both the buyer and the writer (seller) of the same type
of option (puts or calls) on the same underlying stock, with the
options having different exercise prices and/or expiration dates.  For
example, one could buy an DEC June 35 call and sell a DEC March 35 call
or even a March 30 call.  This strategy can be viewed as rolling your
option equity over with time or with the change in perceived value.

Standard Deviation--
The positive square root of the expected value of
the square of the difference between a random variable and its mean.

Sterling Ratio
(or Return to Drawdown or MAR Rado)
A rado that compares the rate of return with the worst-case loss, thus
a measurement or risk-adjusted rate of return, calculated as follows:
(Annual ROR)/(Maximum drawdown).

Stops--
Buy stops are orders that are placed at a predetermined price
over the current price of the market. The order becomes a "buy at the
market" order if the market is at or above to the price of the stop
order. --Sell stops are orders that are placed with a predetermined
price below the current price. Sell-stop orders become "Sell at the
market" orders if the market trades at or below the price of the stop
order. A stop placed too close to the market is likely to be hit
resulting in small losses.  A stop placed too far will seldom be hit,
but the losses will be much greater.

Stop and Reverse (SAR)--
A stop that, when hit, is a signal to reverse
the current trading position. i.e.. from long to short. Also known as
reversal stop.

Stop Close Only (SCO)
A stop order which can be triggered and executed only during the
market's closing range.

Stop Limit
A variation on the simple stop, the stop limit instructs the filling
broker to fill your order at your price or better, if possible once
your stop is triggered. This gives the trader more control over his
fill price. If however, the market runs the stipulated price before the
broker is able to execute it, the order becomes a regular limit order.
Then, if the market does not return to the specified level before the
order expires, the order will not be executed.

Stop Limit Close Only (SLCO)
A stop limit order which can be triggered and executed only during the
closing range.

Stop Loss--
The risk management technique in which the trade is
liquidated to halt any further decline in value.

Stop with Limit
Similar to the stop limit except that the trader must stipulate two
prices with the limit price being farther away from the current market
than is the stop price.

STRADDLES-
Straddles differ from spreads in that a straddle involves
purchasing - or selling both a put and a call on the same stock, with
the same exercise price having the same expiration date.  In this way
the option value can move in either direction to be profitable,
providing that the movement is great enough to cover the cost of the
straddle.  The cost of the straddle may be roughly twice either the
call or the put, and the commissions would be applied to both.  So
straddles are relatively safe, but very expensive.

Support--
A historical price level at which falling prices have stopped
falling and either moved sideways or reversed direction; usually seen
as a price chart pattern.

T-test--
A statistical test of significance for a distribution that
changes its shape as N gets smaller: based on a variable t equal to the
difference between the mean of the sample and the mean of the
population divided by a result obtained by dividing the standard
deviation of the sample by the square root of the number of individuals
in the sample.

Technical Analysis--
A form of market analysis that studies demand and
supply for securities and commodities based on trading volume and price
studies. Using charts and modeling techniques, technicians attempt to
identify price trends in a market.

Tick--
The minimum fluctuation of a tradable. For example, bonds trade
in 32nds. while most stocks trade in eighths.

Transform--
A process to change or convert. For example, a simple moving
average is a filter to reduce noise: the moving average is the
transform function.

VAMI
Value-Added Monthly Index, represents the growth of $1,000 invested at
the start of the track record based on the historical monthly rates of
return.