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.
A loan that is issued and supported only by the borrower's creditworthiness, rather than by some sort of collateral. |||Generally, a borrower must have a high credit rating to receive an unsecured loan. Commercial paper is an example of an unsecured loan.
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.
A bond with floating coupon payments that are adjusted at specific intervals. The bond is payable to the bondholder upon demand following an interest rate change. Generally, the current money market rate is what is used to set the interest rate, plus or minus a set percentage. As a result of this, the coupon payments can change over time. |||Although a demand bond can be redeemed at any time, bondholders are often encouraged to keep the bonds in order to continue receiving coupon payments. The floating rate of the coupon payment contributes to higher uncertainty in coupon cash flows compared to generic bonds. Some of this risk is mitigated by the redemption option.
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.
An interest rate that moves up and down based on the changes of an underlying interest rate index. |||For example, a credit card might have a variable rate that is a certain spread over the prime rate.