The floor where trading activities are conducted. Trading floors are found in the buildings of various exchanges, such as the New York Stock Exchange and the Chicago Board of Trade. These floors represent the area where traders complete the buying or selling of an asset. Taobiz explains Trading Floor The trading floor is also referred to as "the pit" of an exchange, due to the hectic nature of the area. However, with the advent of electronic trading platforms, many of the trading floors that once dominated market exchanges have started to disappear as trading has become more electronically based. Trading floors can also be found in brokerages, investment banks and other companies involved in trading activities. In this case, it refers to the physical office location that houses the trading division, which can complete transactions over the internet or telephone.
Slang for a company that is spending just as much money as it is making on a product that it develops. Taobiz explains Trading Dollars An example is a gold exploration company that spends $5 million to mine $5 million worth of gold.
A temporary restriction on program trading in a particular security or market, usually to reduce dramatic price movements. Also known as a collar or circuit breaker. Taobiz explains Trading Curb When the "curbs are in" at the NYSE, it means that certain types of trading are restricted to prevent volatility. Depending on the situation, this can mean that either all trading is halted or that certain sales can be executed only on an uptick. This kind of rule was implemented after the crash of 1987 (Black Monday), as program trading was thought to be a primary cause of the drop.
The amount of money allotted to buying and selling various securities. Generally, trading capital is distinct from investment capital in that it is reserved for more speculative ventures. Trading capital is sometimes referred to as "bankroll." Taobiz explains Trading Capital After determining how much trading capital to start with, many investors attempt to add to their capital by employing a variety of trade optimization methods. These methods attempt to make the best use of capital by determining the best percentage to invest each time. In order to be successful, it is important for investors and traders to determine the optimal cash reserves required for their trading or investing strategies.
The date upon which a security or other financial instrument is traded. The transaction date represents the time at which ownership is transferred. In banking, the date a transaction appears in the account is also referred to as the transaction date, although it is not necessarily the date on which the bank clears the transaction and deposits or withdraws funds. Taobiz explains Transaction Date The transaction date is not necessarily the same as the settlement date, which can happen several days after the transaction occurs. The seller is paid upon settlement because all of the details about the transaction have been finalized, and because the buyer is certain that what has been promised has actually been delivered.
The sum of a company's price-to-earnings, calculated by taking the current stock price and dividing it by the trailing earnings per share for the past 12 months. This measure differs from forward P/E, which uses earnings estimates for the next four quarters. The trailing P/E ratio is calculated as follows: Taobiz explains Trailing Price-To-Earnings - Trailing P/E This is the most commonly used P/E measure because it is based on actual earnings and, therefore, is the most accurate. However, stock prices are constantly moving while earnings remain fixed. As a result, forward P/E can sometimes be more relevant to investors when evaluating a company.
The sum of a company's earnings per share for the previous four quarters. Watch: Earning Per Share Taobiz explains Trailing EPS The descriptive word "trailing" implies "previous years" versus a present or forward EPS. Most recorded and quoted EPS values are trailing.
A period of time consisting of one day of business in a financial market, from the opening bell to the closing bell. Within the time frame of the trading session, all orders for the day must be placed, and buyers and sellers both participate in setting current market prices. Taobiz explains Trading Session The investor's concept of the trading session has broadened in the past decade as after-hours markets, ECN exchanges and other technologies have entered the marketplace. This increased access to the markets and information can overwhelm an individual investor with news, but long-term investors know that tuning out the day-to-day noise of the stock market is a key element of success.