| COMMON TERMS USED AT ASL TRADECAST SCREEN: |
| Common |
Terms Description |
| Market |
The type of trade in which the Security falls |
| Symbol |
Unique short name assigned to any particular script by PSX |
| Change |
Difference between the last traded and close of the previous day’s price |
| Buy Vol |
No. of Securities investor intends to buy |
| Buy |
The rate at which investor intends to execute his/her buy order |
| Sell |
The rate at which investor intends to execute his/her Sell order |
| Last Vol |
No of Securities executed/traded in previous/last trade. |
| Last Price |
The price at which last trade took place |
| Total Vol |
Total No. of Securities traded during a particular time/day |
| Avg |
Total value of Security traded, divided by No. of Securities traded |
| High |
The highest rate at which the Security traded |
| Low |
The lowest rate at which the Security traded |
| Prev. Close |
Previous day’s closing price |
| Trade Time |
The time at which the trade took place |
| Limit Order |
A limit order is when the user enters the order into the systemwith a specific price |
| Buy |
The rate at which investor intends to execute his/her buy order |
| Market Order |
A market order is when the user enters the order into the systemwithout a specific price. The order is executed according to thevolumes available at available price. |
| Market Lot |
Market Lot is the normal unit of trading for a security, which isusually 500 shares of stock having price less than Rs.100/- and100shares of stock having price above Rs.100/-. |
| Odd Lots |
For stocks, any transaction less than the market lot is usuallyconsidered to be an odd lot and therefore the transaction iscarried out in ODD Lot market rather than Regular/Ready market. |
| Margin Call |
A margin call most often occurs when the amount of actualcapital the investor has, drops below a set percent of the total investment. A margin call mayalso be triggered if the brokerchanges their minimum margin requirement. |
| Stop Loss Order |
A stop-loss order is a request to sell a security once the marketprice reaches or falls below an investor-specified price. Once thetarget price has been reached or surpassed, the order becomes a"market" order. A stop-loss order is typically used to sell a security,to lock in profits or limit losses if a security price falls. |
| Short Sell |
Short selling refers to the practice of selling securities in thehope of repurchasing them later at a lower price. This is done inan attempt to profit from an expected decline in price of asecurity. |
| Trade Process: |
| TRADING (T+0) |
Order is placed by the client through trading software or by the broker through his system afterconfirmation from client. |
| CONFIRMATION |
Daily Client Confirmation Report is sent to the client through email, confirming the details ofthe transactions along with commission and taxes charged. |
| ORAL CONFIRMATION |
Broker informs the clientonce the order(s) aresuccessfully executed. |
| T+2 |
Shares are transferred to client’s CDC Sub-Account. The client has to make sure thatoutstanding amount (if any) is paid against the trade executed on T+0 |
| ReadyMarket Related Information |
| TRADING (T+0) |
| Ready Market |
All regular market transactionsfollow the T+2 settlement system |
| Future Market |
The client’s open position will be mark to market (MTM) on daily basis,whereby MTM losseshave to be paid by the client on daily basis (if cash margin falls short of 25%) until expiry of thecontract or until open positions are squared out. |
| MTS Market |
Other than depositing FPR (finance participation ratio) of 15%, the client’s open position willbemark to market (MTM) on daily basis, whereby MTM losses haveto be paid by the client ondailybasis. MTS transactions extend to 60 days. |
| RISK OF SECURITIES TRADING: |
| Market / Economy Risk: |
Market risk is the possibility for an investor to experience losses due to factors that affect the overallperformance of the financial markets in which he is involved. Market risk, also called "systematic risk,"cannot be eliminated through diversification, though it can be hedged against. |
| Industry Risk: |
Industry Risk refers to the impact that the state's industrial policy can have on the performanceof a specific industry. |
| Management Risk: |
The management is the face of an enterprise. It is the team which gives direction to the futurecourse of action that a company will take. Quality of management is hence paramount.Management changes often have a serious impact on policy matters of companies, therebyimpacting the share price. A management which is unable to meet the challenges posed bycompetition is likely to suffer in performance. |
| Business Risk: |
Business risk is the possibility a company will have lower than anticipated profits or experience aloss rather than taking a profit. Business risk is influenced by numerous factors, including salesvolume, per-unit price, input costs, competition, the overall economic climate and government regulations. |
| Financial Risk: |
Financial risk is any of various types of risk associated with financing, including financialtransactions that include company loans in risk of default. Often it is understood to include onlydownside risk, meaning the potential for financial loss and uncertainty about its extent. |
| Exchange Rate Risk: |
Exchange-rate risk, also called currency risk, is the risk that changes in the relative value of certaincurrencies will reduce the value of investments denominated in a foreign currency. |
| Interest Rate Risk: |
Interest rate risk is the risk that arises for bond owners from fluctuating interest rates. How muchinterest rate risk a bond has depends on how sensitive its price is to interest rate changes in themarket. The sensitivity depends on two things, the bond's time to maturity, and the coupon rateof the bond. |
| How to overcome risk: |
Most risks associated with investments in shares can be reduced by using the tool ofdiversification. Purchasing shares of different companies and creating a diversified portfolio hasproven to be one of the most reliable tools of risk reduction. |
| The process of diversification: |
When you hold shares in a single company, you run the risk of a large magnitude. As yourportfolio expands to shares of more companies, the company specific risk reduces. The benefitsof creating a well diversified portfolio can be gauged from the fact that as you increase thenumber of scrips in portfolio, the concentration dilutes. Hence any adverse event related to anyone company would not expose you to immense risk. The same logic can be extended to a sectoror an industry. |
| However all risks cannot be reduced: |
Though it is possible to reduce risk, the process of equity investing itself comes with certain inherent risks, which cannot be reduced by strategies such as diversification. These risks are called systematic risk as they arise from the system, such as interest rate risk and inflation risk. As these risks cannot be diversified, theoretically, investors are rewarded for taking systematic risks for equity investment |