There are many new terms to learn while using Ideas by TradeSmith. Below is our glossary.
- 52-week high — The highest price the stock traded for in the previous year.
- 1-year change % — The change in price over one year.
- 3-year change % — The change in price over three years.
- 5-year change % — The change in price over five years.
- % Off High — The percentage amount that is the difference between the highest close since entry and the latest close. This can be impacted by dividends.
- Average VQ — The average Volatility Quotient for a position over the past 30 years.
- Days Triggered — The number of consecutive days the alert has been triggered based on its alert requirements.
- Dividends — A dividend is the distribution of reward from a portion of the company’s earnings and is paid to a class of its shareholders.
- Dividend Yield — A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.
- Dow 30 — more commonly known as the Dow Jones industrial average, it is a simple way of tracking U.S. market performance.
- Drawdown — The peak-to-trough decline of an investment, fund, or commodity. A drawdown is usually quoted as the percentage between the peak and the subsequent trough.
- Enterprise Value — The sum of claims of all claimants: creditors (secured and unsecured) and equity holders.
- EPS – Earnings per share. It is calculated as follows: (Net Income – Dividends on Preferred Stock)/Average Outstanding Shares.
- Growth Stocks — These investment ideas identify stocks with strong growth potential based the stock’s current health, our algorithms, and industry best practices to measure each stock’s fundamentals.
- Industry — The term industry refers to a series of companies that operate in a similar business sphere. Examples of industries: The financial sector can be broken down into several different industries such as banks, asset management, life insurance, or brokerages. The companies that fall into the same industry compete for customers by offering similar services. For instance, banks will compete with one another for customers opening up checking and savings accounts, while asset management firms seek investment clients.
- Latest Close — The latest closing price for the position.
- Market Capitalization — the aggregate market value of a company represented in dollar amount. Since it represents the “market” value of a company, it is computed based on the current market price (CMP) of its shares and the total number of outstanding shares.
- Nano: below $50 million
- Micro: $50 million – $300 million.
- Small: $300 million – $2 billion.
- Mid: $2 billion – $10 billion.
- Large: $10 billion – $200 billion.
- Mega: above $300 billion.
- N/A — Data not available for this position.
- Nasdaq 100 — An index basket of the 100 largest, most actively traded U.S. companies listed on the Nasdaq stock exchange. Numerous industries are included except for the financial industry, like commercial and investment banks.
- Nikkei — The leading and most-respected index of Japanese stocks.
- P/B — Price-to-book ratio; it compares the stock’s market value to its book value. The ratio is calculated as follows: Current Closing Price/Latest Quarter’s Book Value Per Share.
- P/E — Price-to-earnings ratio; it compares the stock’s current share price to its per-share earnings. It is calculated as follows: Market Value per Share/Earnings per Share (EPS).
- PEG — Price/earnings-to-growth ratio; it is a ratio used to determine a stock’s value while taking into account earnings growth over the past twelve months (trailing twelve months or TTM). Calculated as Price/Earnings (TTM) / Earnings per Share Growth (TTM).
Russell 1000 — A market capitalization-weighted index, meaning that the largest companies constitute the largest percentages in the index and will affect performance more than the smallest Index members. The Russell 1000 components are reconstituted annually in May. However, newly listed stocks with initial public offerings are considered for inclusion quarterly.
- Russell 2000 — An index is an index measuring the performance of approximately 2,000 small-cap companies.
- S&P 500 — Also known as The Standard & Poor’s 500 index, contains 505 stocks issued by 500 large companies with market caps of at least $6.1 billion.
- S&P 400 — Another Standard & Poor’s index, this represents those stocks with market caps of between $750 million to $3 billion.
- S&P 600 — Yet another Standard & Poor’s index, this represents stocks with market caps of $450 million to $2.1 billion. The companies must also reach certain liquidity and stability requirements.
- Sector — Sector refers to a part of the economy in which a great number of companies can be categorized. A sector is one of a few general segments in the economy within which a large group of companies can be categorized. An economy can be broken down into about a dozen sectors, which can describe nearly all of the business activity in that economy. Economists can conduct a deeper analysis of the economy by looking at each individual sector.
- There are four different sectors in an economy:
- Primary Sector: This sector deals with the extraction and harvesting of natural resources such as agriculture and mining.
- Secondary Sector: This sector comprises construction, manufacturing, and processing. Basically, this sector comprises industries that relate to the production of finished goods from raw materials.
- Tertiary sector: Retailers, entertainment, and financial companies make up this sector. These companies provide services to consumers.
- Quaternary sector: The final sector deals with knowledge or intellectual pursuits including research and development (R&D), business, consulting services, and education.
- There are four different sectors in an economy:
- Shares — Units of ownership in a corporation or financial asset.
- Shares Outstanding — Number of stocks currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.
- Soft Commodity — Futures contracts where the actuals are grown, rather than mined or extracted.
- Spider (SPDR) — Each share of a SPDR contains one-tenth of the S&P 500 index and trades at roughly one-tenth of the dollar-value level of the S&P 500.
- SPDR 10 — these are the 10 sector funds. These include: Consumer Staples, Consumer Discretionary, Technology, Health Care, Industrials, Utilities, Materials, Energy, Financials, and Real Estate.
- SSI — Stock State Indicators. Our proprietary indicators to tell you the health of any investment relative to its standing in the market.
- SSI Distribution — The doughnut chart that tells you how many investments in a market or SPDR are in the SSI entry, yellow, or stop-out zones.
- SSI Entry Signal — The SSI Entry Signal was designed to answer the question of when it’s safe to get back into a stock that was previously stopped out by its SSI Stop Loss. It has two basic components. It tells you when the trend is with you and when the position has had a strong bounce in the desired direction.
- SSI Yellow Zone — The Yellow Zone indicates that the position has corrected somewhat below a recent high, and it has not yet hit its SSI Stop Loss Price.
- SSI Red Zone/ SSI Stop Loss — The stock has hit its SSI Stop Loss and is now in the Red Zone. This indicates that the stock has corrected more than its VQ% below a recent high. The stock is not behaving in a way that is usual based on its historical market trend.
- SSI Trend — Each stock has its own SSI Trend. The math behind the SSI Trend is complex but the concept is simple — find the moving average that was: the best support for longer term trends, and that provided the biggest bounces when price came down to touch support.
- Stock Symbol — An arrangement of characters (usually letters and/or numbers) that represent the stock/option you own. Also known as a Ticker Symbol.
- Total Dividends — The total amount of dividends collected for your invsestment. This is calculated as follows: Total Dividends = Total of Dividends per share (split adjusted) since Entry Date x Shares.
- Value Stocks — A value stock is a stock that trades at a lower price relative to its fundamentals, such as dividends, earnings, or sales, making it appealing to value investors. Value investors can now combine value stocks with positive momentum to narrow down their choices. Our Value tool shows you stocks that are in good health based on our algorithms and that match industry best practices, measuring each stock’s fundamentals.
- Volatility Quotient (VQ) — TradeSmith proprietary algorithm that identifies the volatility of an asset. It will tell you how much room you can give a stock in order to not get stopped out too early. The lower the number, the more stable the movement of that stock. Higher percentages indicate the stock is more volatile in its market moves over time.
- VQ Ratio — The current VQ compared to the average VQ to understand the built-up energy. A positive ratio is part of the Kinetic VQ strategy. A negative ratio can be ignored outside of the Kinetic VQ.
- Volatility Quotient % (VQ%) — The percentage that defines how volatile a stock is, based on its historical price action.
- Volume — The total volume of shares or contracts for the most recently completed trading period.