What are some common stock trading terms?


Quick Answer

Common stock trading terms include EPS, OTC, market value, beta and market capitalization, according to Nasdaq. EPS stands for earnings per share, while OTC is an abbreviation for over the counter. Another abbreviation traders are familiar with is NASD, which stands for National Association of Securities Dealers.

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Full Answer

A company's EPS is the value of the company's overall trading profit divided by the number of common outstanding shares the company has, explains Nasdaq. For example, if a company with 5 million common outstanding shares brings in a profit of $10 million, its EPS value is $2 for that year.

In the stock trading world, an OTC market is one an investor obtains through trading directly with a private dealer rather than through a large-scale exchange such as Nasdaq, notes Investopedia. This type of market is under less regulation and offers less transparency due to its lack of participation in a formal exchange.

The term beta refers to a measure investors use to assess the risk of investing in a particular stock or fund, as CNBC explains. Beta measures how well a security is likely to respond to market fluctuations by providing a picture of the extreme pricing and trading ups and downs the security undergoes.

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