Common Stock Market

1. A stock market on which only common shares are traded.

2. The supply and demand for common shares, whether of a single company, sector, or a
whole economy.
stop order

order lies dormant

turns into market order when certain price (the stop) is reached
buy if price rises to $60
sell if price falls to $58
stop loss order
investor does not have to watch market
but in a volatile market stop could be triggered prematurely
end up trading unnecessarily

stop limit order

turns into limit order when stop is reached,buy if price rises to $60, but only is executed at $65 or less
market if touched order
turns into market order if certain price is reached,buy if price falls to $55,sell if price rises to $62
how long is an order good?
fill or kill order
executed when reaches trading floor, or canceled,good until canceled/open order,is good indefinitely
order size
round lots,lots of 100 shares,odd lots,less than 100 shares,more difficult to trade,block trades,10,000
shares or $200,000 value
Buying on the margin
buyer borrows part of purchase price of stock, using stock as collateral,borrow at call money rate,Fed sets
initial margin requirement,minimum cash payment,50% since 1975
if stock price falls
collateral worth less,if collateral worth only 125% of loan (maintenance margin),margin call,owner must
put up more cash or sell stock,margin calls can worsen stock crash

Stop Order
A stop order, also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock
reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a
market order. A buy stop order is entered at a stop price above the current market price. Investors generally
use a buy stop order to limit a loss or to protect a profit on a stock that they have sold short. A sell stop order
is entered at a stop price below the current market price. Investors generally use a sell stop order to limit a loss
or to protect a profit on a stock that they own.
BUY STOP -People using a buy stop hope to gain if momentum gains on a particular stock. If the price
exceeds the price you have set, it will automatically trigger a market order.
A Sell Stop Order is an order to sell a stock at a price below the current market price. Once a stock's price
trades at or below the price you have specified, it becomes a Market Order to sell. A Sell Stop Order is also
commonly referred to as a Sell Stop/Loss Order. The main benefit of a Sell Stop Order is that you will sell off
your stock IF the price is showing downward momentum, protecting you from steeper losses. Sell Stop Orders
are great for protecting gains and preventing large losses.
A stop-limit order combines the features of a stop order and a limit order.
Once a stock reaches the stop price, a limit order is automatically triggered to buy/sell at a specific target price.
How it works/Example:
Let's say you bought stock ABC at $50 per share. You don't want to lose more than $5 per share, so you set a
stop-limit order for $45.
If the stock dips to $45, the stop price triggers a limit order to sell at $45. If a rapid price decline takes the
stock lower than $45, the limit order will ensure that you don't sell at the lower price. The limit order will only
execute when the stock reaches $45 again.
This is an important difference between stop-loss orders and stop-limit orders. When using a traditional stoploss order, if ABC falls to $45 and triggers the stop price, at that point the order becomes a market order. If the
price continues to fall and is at $42 by the time your market order is executed, then you will only receive $42
per share. A stop-limit order enables you to maintain some control over the price at which you buy or sell.
Butnote that with all limit orders, if the limit price is never reached, the order will never be executed. In the
above example, if the stock falls to $42 and never bounces back to $45, your limit order won't trigger and
you'll still own the shares you were trying to sell at $45.
DEFINITION of 'Market If Touched - MIT' A conditional order that becomes a market order when a
security reaches a specified price. When using a buy market-if-touched order, a broker will wait until the
security falls to a certain level before purchasing the asset. A sell market-if-touched order will activate when
the price of a security rises to the specified level.
Buying on margin is borrowing money from a broker to purchase stock. You can think of it as a loan from your
brokerage. Margin trading allows you to buy more stock than you'd be able to normally. To trade on margin,
you need a margin account. This is different from a regular cash account, in which you trade using the money
in the account. By law, your broker is required to obtain your signature to open a margin account. The margin

account may be part of your standard account opening agreement or may be a completely separate agreement.
An initial investment of at least $2,000 is required for a margin account, though some brokerages require more.
This deposit is known as the minimum margin. Once the account is opened and operational, you can borrow up
to 50% of the purchase price of a stock. This portion of the purchase price that you deposit is known as
the initial margin. It's essential to know that you don't have to margin all the way up to 50%. You can borrow
less, say 10% or 25%. Be aware that some brokerages require you to deposit more than 50% of the purchase
price. a transaction cost is a cost incurred in making an economic exchange (restated: the cost of
participating in a market).The term soft dollars refers to the payments made by mutual funds (and other money
managers) to their service providers. The difference between soft dollars and hard dollars is that instead of
paying the service providers with cash (i.e. hard dollars), the mutual fund will pay in-kind (i.e. with soft
dollars) by passing on business to the brokerage.
IMPACT COST-Part of the expense of trading a security,
which includes the concession an underwriting syndicate will receive for bringing the security to market.
These costs often affect the market liquidity of a security issue. Typically used by large financial
institution to determine the viability of an security purchase. TIMINGCOST-Expenses associated with
a security transaction that are not directly related to the transaction. For example, if a trade is conducted
at market price and the stock price moves before the trade is executed, the timing cost would be the difference
between the quoted price at the time the order was given and the actual executed price. OPPORTUNITY
COST A benefit, profit, or value of something that must be given up to acquire or achieve something else.
Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice,
or decision has an associated opportunity cost. Opportunity costs are fundamental costs in economics, and are
used in computing cost benefit analysis of a project. Such costs, however, are not recorded in the account
books but are recognized in decision making by computing the cash outlays and their resulting profit or loss.