Learn Financial Tearms for Stock Selection Criteria and Stock Screening Before Trading

Learn Financial Terms for Stock Selection Criteria and Stock Screening Before Trading

This book covers financial terms used to select stock before trading and investing.

All significant financial terms are explained in plain and simple language that any reader can grasp within a short reading period.

With the assistance of this book, the reader can increase the odds in his or her favor to win or profit in the stock markets.

By

Pimarn Charn., Ph.D., MBA

Copyright © 2015 by Pimarn Charn

All rights reserved,

Including the right of reproduction

In whole or in part in any shape of form

Library and Archives Canada Cataloguing in Publication

Charn., Pimarn

Learn Financial Terms

for Stock Selection Criteria

and Stock Screening Before Trading

This book covers the financial terms used to select stock before trading and investing.

All significant financial terms are explained in plain and simple language

that any reader can grasp within a short reading period.

With the assistance of this book, the reader will increase the odds in his or her favor

to win or profit in the stock markets.

ISBN 978-0-9948552-3-7

To My Greatest Parents

The greatest parents on earth who provide me with all the support needed to encourage my knowledge, and also my life.

The life they have suggested I live is one where I constantly strive to help others.

They encouraged me to share my knowledge with people and to give others whatever I can give to improve their wellness and lives.

Disclaimer

This book is written with the sole purpose of sharing information and experiences. It is hoped that readers will make use of this information to fit their needs and take their own ultimate responsibilities. This book is, therefore, provided and sold with the knowledge that the publisher and author do not offer any legal or professional advice. It is recommended that the readers consult with professional expertise before proceeding with any decision.

This book does not contain all information available on the subjects discussed. Rather it contains only information that the author did made every effort to compile from various researches. There are no representations or warranties, express or implied, about the completeness, accuracy, reliability, or suitability with respect to the information contained in this book for any purpose. References are also provided for informational purposes only and do not constitute any endorsement, support, or guarantee of this information. Any use of this information is solely at the readers own judgment, responsibility, and risk.

Also, the author has made the best of his ability to explain them in a simple way. The methods describe within this book are the author’s personal thoughts. They are not intended to be a definitive set of instructions. This book should, therefore, serve only as a general guide for further educating or learning and not as the ultimate source of this subject matter. The readers must analyze the information, make their own judgment, and use responsibility. The publisher and author shall not have any liability or responsibility to any person or entity incurring directly or indirectly from using the information contained in this book.

The Purpose of This Book

Most people, including myself, don’t always have the patience to pursue or reach the goals that we set. When circumstances control us, our minds are less flexible and we act more carefully. Sometimes we have to repeat our work as we originally completed without thoroughly thinking.

Commonly, we don’t have a firm basic foundation or background on the work we are dealing with so we have no confidence when performing such work. This means we might not get the expected result, even if we put forth our best effort. If we don’t achieve what we are looking for, or in other words are unsuccessful, we give up and find another way to reach our goals. This is a terrible mistake, creating a circle that takes us nowhere, never letting us progress past the point of our knowledge.

Understanding the basics and the background of what we are attempting to do is the best way to overcome repeating our works and will gradually bring us closer to the target or our goal. To be active in investments or trading in any stock market, it is so crucial and imperative that we understand all the significant terms that are used to determine how good or how bad stocks are.

We don’t have to know all the terms that are used in the stock market, just those basic and critical terms.

Once we develop the patience to understand all these important terms, we will learn the mechanism of stock prices - why it goes up and comes down. What are other investors or traders thinking? Why do they refer to these important terms and how do they benefit from them? In other words, we will know much more about the game that we are engaging in.

It is also very critical to advise here that any investor or trader who has no patience and cannot control their moods or feelings shouldn’t expect high success on this road. You might have read a ton of books that are related to the strategy of investing in the stock market and surely have found that one of critical pieces of advice is to remain calm and not be too emotional. Once people give in to their emotions, they likely aren’t going to make the right or best decision. They would fail in this game of investing and trading as the game involves money, pressure, excitement, and uncertainty which happen constantly and nonstop.

By learning all the basic terms and the background of stock through clearly explained definitions, a confidence will develop in us and we can better control our minds. This is simply because once we understand the impact of the information that we receive, we can calm our mind as we no longer need to wonder or worry about gauging or predicting the impact of such information.

Finally, learning these financial terms will purposely prepare us for searching stocks in the market using a stock screener. These financial terms are a part of the stock selecting criteria. Investors and/or traders will input the value of these financial terms in the stock screener then the screener will search for stocks that meet the inputted financial terms. Imagine, if we don’t understand these financial terms we will certainly not be able to provide good criteria for a stock screener to search for a stock.

There is a well-known metaphor that whatever we input into a computer program is equivalent to the output we receive. If we input junk into the computer program, we can expect junk as an output. The same applies with financial terms. If we don’t know them well and we input them in the stock screener, what are we going to expect? Of course, the stock screener will not search or choose the right stocks for us.

Furthermore, there are many stock strategies involved in selecting the right stock. It is more complicated than a computer program, so learning the financial terms well is a basic must for the road map to screening stocks. Once you understand these financial terms well and are ready for screening stocks, you might highly benefit from reading my other book, Best Stock Investing and Selecting Strategies. (6) This book has summarized all kind of strategies that have been proven to work and has already helped generate a successful profit for many big and famous investors.

Chapter 1: Stock Data

In this chapter, we will learn about the basic information on stock data. This stock data will include the price of stock. Investors and traders interested to know the size of the company offering the stock can check the market capitalization of the company. Investors and traders often also like to know how big the operation of the company is in term of its manpower and how much the company generates its earnings through each capita of its employees.

Also, investors and traders want to know which sector or industry is categorized for the company so they can compare the performance of one company to another in the same and/or similar type of sector and industry. Finally, investors and traders have to know on which exchange or stock market that the specific stock is being traded.

We will explain the meaning of this basic information term by term and elaborate further of their importance. Each of these basic definitions has its own merit that investors and traders could make use of to create a profitable investment and trade.

Stock price

The stock price is the current price being traded. However, the stock price that we see might vary from one website to another. These websites have been made available by financial institutions or related organizations. The stock price that we see could be delayed by at least 20 minutes. One website might get the stock price and its data then distribute it to us sooner or later than other websites.

This means whatever stock price and data that we see on a website for any specific stock is the data of previous trading activities within at least the past 20 minutes. It is not real time data. Therefore, we cannot expect to get or trade the stock price and its data by what we see on the website. That stock price and its data have already passed. We can only estimate or predict what is going on by this 20+ minutes that has already passed and we haven’t yet gotten this stock price and its data from the website.

This stock price is the price per share that is being traded. The stock price that we saw from this website provider was the last trading stock price at that specific time.

Market capitalization

Market capitalization is an aggregate value for the company’s stock. To put that in simpler terms, it is an overall value of a company’s stock in the market at the closing period on a certain specific day. The market capitalization could be calculated by taking all outstanding shares of the company and multiplying by the stock price at the closing period of the previous trading day.

Investors and/or traders look first at the market capitalization of company. This number will tell the size of business of the specific company. In another words, depending on how big or small the value, that is what the company could be worth. By knowing the size of company, investors and/or traders can know or think of strategic activities that they can use to invest or trade the stock of this company.

Imagine, for a small market capitalization it might mean a small amount of financial investment would be all that is needed to explore this specific company. In addition, the volume of stocks that are available to the public in the stock market might also be small. This means that the movement or liquidity of the stock in this company will be very limited and may not be flexible.

On the other hand, investors and/or traders might see this small market capitalized company as an opportunity. What opportunity is this? It is an opportunity to grow. If the small market capitalized company can perform well in the market, it will definitely have the potential to grow bigger overtime. Once it grows bigger,