Terms to Know When Dealing in Penny Stock Quotes

If you’re thinking to deal in penny stock quotes and other aspects of that trade, one of the most essential tools you will use is the language.

If you are new to the scene, you might be daunted by all the foreign-sounding terms used by fellow investors. Don’t let all that scare you off. You will gain an understanding of these terms in your own time.

Take note- the most important thing in dealing in penny stock quotes is not the amount of money you have, or how naturally lucky you think you are. The most important thing is to accumulate knowledge. As long as you make all your decisions based on knowledge and nothing else, you will make fewer missteps than the other investors. True, it may seem as if a lot of people earn through strokes of good luck, but it can never be a consistent basis for anything. If you proceed knowledgeably, you can be assured of all least moderate yet constant profits.

Definition of Key Terms

To start you off, here is a definition of some important terms frequently used in the penny stock market.

Ask price- This refers to the price that investors are willing to sell their stocks to potential buyers.

Bid- This is the price that investors are willing to set down for a certain share.

Bear Market- This refers to the market wherein prices are going down. In this scenario, they are expected to plunge even lower in a short period of time.

Bull Market- This refers to the market where prices are rising. In this scenario, the trend is expected to go on upwards in a short period of time. This is the polar opposite of “bear market”.

Dividend- This is paid two times a year and is the cash distribution to all the shareholders out of a certain company’s profits. Only some companies pay this.

Dividend Yield- The percentage of the existing share price. It refers to the dividends per share that have been paid over the current year.

Dividend Cover- This can be computed by dividing the earnings per share by the dividends per share. It indicates the amount of profit paid to shareholders. If the cover is lower than one, it means that the company dips into reserves just to keep up their dividends.

Delisted- A delisted stock is a stock that is no longer traded by the stock exchange. It means that it may not have been able to meet its requirements on the listings, or might have been taken over by a different company. In some cases, it means that the stock has moved to a different exchange.

EBIT- Earnings before Interest and Tax.

ESOP- Employee Share Ownership Scheme.

Earnings Per Share- This is computed by dividing the company’s profits during the most recent year by the number of shares that were issued.

Flotation- This is when a company’s shares are issued to the stock market public for the very first time.

Holding Company- This refers to one company that controls one or multiple companies.

Liquidity- This indicates how easily an asset can be converted into cash.
Once you master the nuances of the penny stock quotes trade, including terms and strategies, you will be well on your way to becoming a power investor.