When investors flock to a class of securities or other assets, bidding up prices to beyond what can be justified by valuation or other fundamental measures. While the dash-to-trash effect can occur within any type of security, the phrase is typically used to describe low-quality stocks and high-yield bonds, both of which can be subject to periods of overbuying in the markets. Taobiz explains Dash To Trash As the name graphically implies, investors are buying low-quality assets or assets that do not correctly price in the risks associated with them. The dash to trash often occurs near the end of a prolonged bull market, when investors begin to seek higher returns regardless of the risks involved. The longer it has been since a market downturn, the more likely it becomes that large pockets of investors will feel bulletproof.
An agent that mediates sales and exchanges between securities buyers and sellers at even lower commission rates than those offered by a regular discount broker. As one might expect, deep discount brokers also provide fewer services to clients than standard brokers; such brokers typically provide little more than the fulfillment of stock and option trades, charging a flat fee for each. Taobiz explains Deep Discount Broker With the advent of online trading, deep discount brokers have grown more and more popular. Even older, established brokerage houses have added deep discount broker services to their list of financial service offerings.
When a security's price falls in value over a given trading day and subsequently closes at a lower value than its opening price. A decline can happen for any number of reasons, including a reduction in the firm's intrinsic value, or as a result of the security's price dropping below its support level. Taobiz explains Decline Decline aggregate data is used to calculate the advance/decline index, which traders use to determine the direction of the market at any given point in time. It is often considered the most effective tool in gauging the market's direction or sentiment.
An order that cancels and replaces a previously submitted day order, producing a new request with an adjusted volume or price limit. The term is primarily used by traders in the general equities market. As with a day order, the day-around will expire by the end of the business day. Taobiz explains Day-Around Order A day-around order simplifies the cancellation and reorder process in trading by combining a cancel order form with a day order. For example, let's say that an investor submits a day order to purchase stock XYZ with a limit at $50. The investor hears some detrimental news surrounding company XYZ and wants to lower the limit on the day order. Instead of submitting a cancel order form and submitting another day order, the investor can simply submit a day-around order with a new limit price.
The process of changing the prices that securities trade at from fractions to decimals. Taobiz explains Decimalization The reasoning behind this was to make prices more easily understood by investors, and to bring the United States into conformity with international practices.
A stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free-float methodology is used to calculate the index weightings along with a measure of average trading volume. The DAX was created in 1988 with a base index value of 1,000. DAX member companies represent roughly 75% of the aggregate market cap that trades on the Frankfurt Exchange. Taobiz explains DAX In a different twist from most indexes, the DAX is updated with futures prices for the next day, even after the main stock exchange has closed. Changes are made on regular review dates, but index members can be removed if they no longer rank in the top 45 largest companies, or added if they break the top 25. The vast majority of all shares on the Frankfurt Exchange now trade on the all-electronic Xetra system, with a near-95% adoption rate for the stocks of the 30 DAX members.
The amount of debt or leverage that a company is carrying on its books. The amount of debt a firm is carrying can be found in the company's balance sheet, which most firms provide on a quarterly basis. Companies may incur this debt for numerous reasons such as expanding their business or making an acquisition. Watch: The Debt To Equity Ratio Taobiz explains Debt Load A very useful insight into the financial health of a company is to compare the amount of debt a company is carrying to the assets or equity the company has. Dividing the total debt a company has by the total assets a company has gives what is called a debt ratio. A low debt ratio is usually a sign of a healthy company.
A company's highly anticipated initial public offering (IPO) that becomes a blockbuster with investors. The Death Star IPO is a reference to the DS-1 Orbital Battle Station, also more popularly know as the "Death Star," from the movie "Star Wars." This planetary weapon had the ability to destroy entire planets with a single beam, resulting in a massive explosion. In the stock market, stocks that have the ability to explode out of the gate are usually highly anticipated tech stocks, although stocks from other sectors can also fit the bill. Taobiz explains Death Star IPO Broadly speaking, to be considered a Death Star IPO, the IPO would have to be a multi-billion dollar offering that is also in very high demand with investors. Some examples of Death Star IPOs include Google's IPO in 2004 and Yahoo! in 1996. Both IPOs were highly anticipated events and both stocks exploded on stock markets once the shares became publicly available.
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