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Finance GlossaryBounce Trading
Bounce Trading
Definition of Bounce Trading
Bounce trading refers to buying a position in security when its price falls to a particular support level with the anticipation that it will “bounce” back to a certain price level. Technical analysis is the bedrock of bounce trading but various patterns and strategies can be used to achieve the desired goal.
Related Terms
SEBI (Securities and Exchange Board of India)
The Securities and Exchange Board of India is the authority that regulates the securities market in India. It protects the interests of investors and ensures that trading practices are fair. The body also promotes transparency across different exchanges and intermediaries. SEBI regulates brokers and prevents the market from being manipulated. Thus, the authority plays a crucial role in regulating Indian financial markets and maintaining transparency.
Balance Sheet
A balance sheet is a financial statement that reveals a company’s assets, liabilities, and shareholders’ equity. It can help current and potential investors understand the financial health of a company.
These are some of the key components of a balance sheet:
These are some of the key components of a balance sheet:
- Current assets : Cash & cash equivalents, marketable securities, accounts receivable, inventories, prepaid expenses, and other liquid assets
- Fixed assets : Property, equipment, furniture, machinery, software, and other intangible assets
- Current liabilities : Short-term debt, unearned revenue, accounts payable, other accrued expenses & liabilities
- Long Term liabilities : Long-term loans, bonds, and others
- Shareholders’ equity : Paid-in capital and retained earnings
Listing
Listing is the process of a private company making its shares available for trading to the public on a recognized stock exchange. To do so, the company meet regulatory requirements and checks. Getting approval means going public and welcoming bids from potential investors.
P/B Ratio (Price-to-Book)
The Price to Book (P/B) Ratio is a valuation metric used by investors to compare a company's current market price per share to its book value per share. The book value is the net asset value of the company (Total Assets - Total Liabilities). A low P/B ratio (e.g., below 1) indicates that the stock is undervalued, but it could also signal underlying issues with the company. A high P/B ratio indicates that the investors are willing to pay a premium for the net asset value of the company, often because of strong growth expectations.
Expense Ratio
An expense ratio is a management fee that investors must pay for the services of the fund manager and their team. Mutual funds are handled by fund managers who take care of everyday stock analysis, buying & selling, and other activities. The expense ratio is a fee to compensate for this day-to-day management.
Hammer Candlestick Pattern
A Hammer Candlestick pattern occurs when a stock, commodity, or currency opens much lower than its previous closing price but moves close to or above the the same price at the close. The pattern looks like a hammer, hence the name “Hammer Candlestick”.
The candlestick can be read as follows:
The candlestick can be read as follows:
- The main body shows the difference between the financial security’s opening and closing price.
- The wick (shadow) of the candlestick shows the high and low prices of the security for the day.
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