Stock Trading Glossary - M


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Margin - After you have exhausted all of your cash in your trading account, and if you are approved to trade on margin, you can purchase shares of a security on loan from the brokerage firm you are trading with. If the price of the security increases, then you gain on your original holding of the security, plus you gain on the margined holding as well. However, trading on margin can be risky if the trade goes against you, because you could be given a margin call for additional funds.


Margin Call - If a margined trading position goes against you by a certain amount depending on regulations, then a margin call is issued to you demanding you deposit money into your trading account to make up for the percent deficiency in your losing stock position. It is possible to lose more money in a margined investment than you started with.


Market Capitalization - This is a common way to valuate a company's value. The total outstanding shares times the current market price gives you the market cap.


Market Order - If you place an market order for an equity, then you are willing to accept the purchase of that equity at whatever current price the exchange is willing to sell it to you for.


Micro-Cap - A company whos market capitalization is less than $250 million dollars - Considered a small company.


Mid-Cap - A company whos market capitalization is between $1 billion and $5 billion.


Money Flow - A common indicator of strength. This is a measure of how much money is flowing in and out of a stock, or the market. It is a guage of future prices.


Moving Average - By adding up the total volume for a stock for, as an example, 20 days, and then you divide that number by 20, you get the 20 day simple moving average. This can help you gauge volitity in the stock over a 20 day period. The 20/50 indicator is a moving average that determines future price direction from a top or bottom forming. If the 20 day moving average moves below the 50 day moving average, then that is considered bearish. The opposite is true if the 20 day moving average moves above the 50 day moving average, then that would be considered bullish.


Mutual Fund - Typically a basket of stocks bundled under one name. It allows an investor to hold a diversity of stocks, all while having a mutual fund manager oversee the balancing of that portfolio of stocks. Mutual funds are a great way to own many different stocks, but mutual fund fees can be quite high depending on the fund.



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