Common Terms
- Dividend
Definition: Distribution of company profits to shareholders
Types: Cash dividends, stock dividends, special dividends
Frequency: Usually quarterly
Key dates: Declaration, ex-dividend, record, payment - Day Trading
Definition: Buying and selling securities within the same trading day
Characteristics: Short-term, high-frequency trading
Requirements: Minimum account balance ($25,000 in US)
Risks: High stress, potential losses - Diversification
Definition: Spreading investments across different assets to reduce risk
Methods: Asset classes, sectors, geographic regions
Benefits: Risk reduction, potential stability
Example: Mix of stocks, bonds, real estate, commodities - Dow Jones Industrial Average (DJIA)
Definition: Stock market index of 30 large US companies
Nickname: The Dow
Calculation: Price-weighted index
Significance: Oldest continuous US market index - Due Diligence
Definition: Thorough investigation before investment decision
Components: Financial analysis, market research, company background
Purpose: Risk management
Importance: Fundamental to informed investing - Derivative
Definition: Financial instrument deriving value from underlying asset
Types: Options, futures, swaps
Usage: Hedging, speculation
Risk level: Can be high - Debt-to-Equity Ratio
Definition: Company’s total debt divided by shareholders’ equity
Purpose: Measures financial leverage
Formula: Total Liabilities / Shareholders’ Equity
Interpretation: Lower generally better - Downtrend
Definition: Pattern of declining prices over time
Characteristics: Lower highs and lower lows
Technical analysis: Important pattern
Trading: Bearish signal - Dividend Yield
Definition: Annual dividend payment relative to stock price
Formula: (Annual Dividend / Stock Price) x 100
Usage: Income investing metric
Comparison: Industry averages - Direct Listing
Definition: Going public without traditional IPO
Advantage: Lower costs, no new shares issued
Disadvantage: No capital raised
Example: Spotify, Slack
Less Common Terms
- Dark Pool
Definition: Private exchange for trading securities
Purpose: Large block trades
Advantage: Price impact minimization
Controversy: Market transparency issues - Debenture
Definition: Unsecured corporate debt instrument
Security: Backed by company credit only
Risk: Higher than secured bonds
Interest: Usually fixed rate - Dilution
Definition: Decrease in existing shareholders’ ownership percentage
Causes: New share issuance, convertible securities
Impact: Often reduces share price
Example: Stock options exercise - Drawdown
Definition: Peak-to-trough decline in investment value
Measurement: Percentage decline
Usage: Risk assessment
Importance: Portfolio management
Technical Terms
- Double Top
Definition: Technical chart pattern showing two consecutive peaks
Significance: Potential reversal signal
Formation: Resistance level tested twice
Trading: Bearish pattern - Dead Cat Bounce
Definition: Temporary recovery in stock price during downtrend
Characteristics: Short-lived rally
Origin: Trading folklore
Warning: False recovery signal - Delta
Definition: Option’s price change relative to underlying asset
Range: -1 to +1
Usage: Options trading
Importance: Risk measurement
Industry-Specific Terms
- Depository Trust & Clearing Corporation (DTCC)
Definition: Organization handling securities settlement
Function: Post-trade services
Role: Market infrastructure
Importance: Systemic risk reduction - Depositary Receipt (DR)
Definition: Foreign company shares traded on local exchange
Types: ADR, GDR
Purpose: International investing
Example: Foreign companies trading in US - Delisting
Definition: Removal of stock from exchange trading
Causes: Non-compliance, voluntary withdrawal
Impact: Reduced liquidity
Result: Often trades over-the-counter
Advanced Terms
- Duration
Definition: Measure of bond’s price sensitivity to interest rate changes
Usage: Fixed income investing
Formula: Complex calculation
Importance: Risk assessment - Dollar-Cost Averaging
Definition: Investment strategy of regular fixed-dollar purchases
Purpose: Reduce impact of volatility
Advantage: Systematic investing
Application: Long-term investing
This comprehensive list covers various “D” terms in stock market terminology, from basic concepts to advanced trading terms. Each entry includes relevant context and related information to help understand its application in financial markets.