The new investor’s glossary: R to S

Fsp Invest, 04 Feb. 2014

Tags: investment, glossary, terminology, definitions, investing, investors glossary, rights issues, ruling price, share split, short sell, spread, stockbroker, stock broker, stop loss

If you’re a new investor or thinking about investing some of your cash on the stock market, it makes sense to learn some of the terminology that goes with it. As you become a more seasoned investor, it becomes easier to understand. Read on to uncover the most important investing terms starting with R to S…

Understanding stockbroker speak will help you on your investing venture, the research team at Red Hot Penny Shares explain…

Your vital investment glossary

Rights issue: This is when a company listed on the stock exchange issues new shares. The company offers these shares to existing shareholders in proportion to their existing shareholding.

Ruling price: This is the last cash sale price of the day on the stock market.

Share split: This is an increase in the number of authorised and issued shares in a company without an increase in the capital. Share splits usually take place when a company’s shares reach a price level that puts them beyond the reach of the average investor.

Short sell: Selling shares you don’t possess in the expectation of being able to buy them at a lower price before they’re due for delivery. With this, the potential loss is limitless since the share price can rise to any level.

Spread: The difference between a market maker’s bid and offer price. This spread tends to be tighter on the large-caps in the market and greater with small-caps and penny shares.

Stockbroker: A member of the JSE who provides advice and/or dealing services to investors.

Stop loss: This is a method of minimising potential losses. You place a limit (somewhere between 10% and 25% below the purchase price of your share). If the share falls to this level, you then sell to minimise your loss. You can also have a trailing stop loss. This means adjusting your stop loss limit as a share price rises.

You can check out N to P here.

So there you have it, your new investor’s glossary from R to S.

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