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D

Investment and Trading Glossary

A B C D E F G H I J K L M N O P  Q  R S T U V W X Y Z

 

D

 

DAY ORDER

An order that is valid only until the close of trading on the day it is entered; if it is not executed by the close of trading, it is canceled.

DAY TRADER

A trader in securities or commodities who opens all positions after the opening of the market and offsets or closes out all positions before the close of the market on the same day.

DEALER

(1)    An individual or firm that is engaged in the business of buying and selling securities for its own account, either directly or through a broker.

(2)    The role of a firm when it acts as a principal and changes the customer markup or markdown.

Syn. principal

See also broker; broker-dealer.

DEBT SECURITY

A security representing a loan by an investor to an issuer such as a corporation, municipality, the federal government or a federal agency. In return for the loan, the issuer promises interest.

See also equity security.

DEFAULT

(1)    The failure to pay interest or principal promptly when due.

(2)    The failure to perform on a futures contract as required by an exchange.

DEFAULT RISK

See credit risk

DEFLATION

A persistent and measurable fall in the general level of price.

DELIVERY

The change in ownership or control of a security in exchange for cash. Delivery takes places on the settlement date.

DESCENDING TRIANGLE

On a technical analyst´s trading activity chart, a pattern which indicates that the market has started to fall; considered to be a bearish indicator.

DISCRETION

The authority given to someone other than the beneficial owner of an account to make investment decisions for the account concerning the security, the number of shares or units, and whether to buy or sell. The authority to decide only timing or price does not constitute “discretion”.

See also limited power of attorney.

DISCRETIONARY ACCOUNT

An account in which the customer has given the registered representative authority to enter transactions at the rep´s discretion.

DISCRETION EXERCISED (DE)

The notation marked on an order placed for a discretionary account to indicate that the representative made the decision to trade.

DISCRETION NOT EXERCISED (DNE)

The notation marked on an order placed for a discretionary account to indicate that the account owner made the decision to trade.
See also discretionary account.

DIVERSIFICATION

A risk management technique that mixes a wide variety of investments within a portfolio, thus minimizing the impact of any one security on overall portfolio performance.

DIVERSIFIED COMMON STOCK FUND

A mutual fund that invests its assets in a wide range of common stocks. The fund´s objectives may be growth, income or a combination of both.

See also growth fund; mutual fund.

DIVERSIFIED INVESTMENT COMPANY

As defined by the Investment Company Act of 1940, an investment company that meets certain standards as to the percentage of assets invested. These companies use diversification to manage risk.

See also management company; non-diversified investment company; 75-5-10 test.

DIVIDEND

A distribution of the earning of a corporation. Dividends may be in the form of cash, stock or property. All dividends must be declared by the board of directors. Syn. Stock dividend. 

See also cash dividend; dividend yield; property dividend.

DIVIDEND PER SHARE

The dollar amount of cash dividends paid on each dividends paid on each common share during one year.

DIVIDEND YIELD

The annual rate of return on a common or preferred stock investment. The yield is calculated by dividing the annual dividend by the purchase price of the stock.

See also current yield; dividend.

DJIA

See Dow Jones Industrial Average.

DNE

See Discretion or discretional  not exercised.

DOLLAR COST AVERAGING

A system of buying mutual fund shares in fixed dollar amounts at regular fixed intervals, regardless of the price of the shares. The investor purchases more shares when prices are low and fewer shares when prices are high, thus lowering the average cost per share over time.

DOW JONES INDUSTRIAL AVERAGE (DJIA)

The most widely used market indicator, composed of 30 large, actively traded issues of industrial stocks.

DOWN TICK

See minus tick.

DUE DILIGENCE

The careful investigation by the underwriters that is necessary to ensure that all material information pertinent to an issue has been disclosed to prospective investors.