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Tuesday 10 December 2013

Important terms or definitions and their interpretation for the stocks

Fundamentals: 

 - Evaluation the Stock Books, for consistent Profit,Loss,Debt.Debt. Generally if the company is zero debt company then its Fundamentally good stock, as the don't have to pay interest for debt and all the money can be used of investment.

Market Capitalisation: 

 - Current Market value of the company or current stock price.

Return on Capital Employed:(ROCE):

  - Profit before Tax and interest/Liabilities of the company. If ROCE is greater than Capital Cost then company is doing good business and likely to give good returns Consistent ROCE increase means that the company is doing good.

Debt/Equity Ratio:

- Total Liability/Shares. If debt is high or greater than 1, then we must not invest in company.

Promoters holding:

 -  Shares of the owners of the company (generally should be more than 50%). Pledged Promoters Holding: The shares that owner has placed with bank and got loan against it.

Counters:

Average - Exponential :

 -  EMA is technical indicator.Generally if EMA crosses SMA from below, u can buy, and sell if it crossed SMA from Above.

Average - Simple :

 -  SMA is again technical indicator used along with EMA.

Bollinger Bands:

  - Again technical indicator where the Movement will be within the Band, when the Share touches the lower band and reverses one can invest. If Share touches the upper band an reverses once can go short or sell

MACD :

  - Another technical indicator based on EMA and momentum. Usually EMA,12,26 and are used .When MACD line crossed the Signal line 9, one can buy. and if crosses from top one can sell or go short

Money flow index:

 -  Same as RSI indicator it will move from 0 to 100 ,BUY at 20 and sell at 80.

Moving Average Envelope:

 - Similar to BOLLINGER band, this is bank based on Simple Moving average(SMA).Values 20,2,2.5 when 2.5% is the band. Not much of use.Ignore it.

Price Median:
  - (Price High + Price Low)/2.

Price ROC :

  - Price Rate of Change, If it crosses '0' and less than '0' SELL.

RSI :

- Buy if it crossed 20 and sell if it crosses 80

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