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Daisy Chain - Illegal act of creating the illusion of trading activity in a stock through collusion of a number of brokers or brokerage offices. (See "Painting The Tape")
Day Order - Order to buy or sell securities that expires at the end of the day it is entered.
Day Trader - Buyer or seller of stocks or other securities for the purpose of speculating on short-term price changes rather than long-term appreciation, are referred to as a day trader. Day traders or a day trader often rely on technical analysis to make day trading decisions. (See "In And Out")
Dealer - Refers to a securities dealer or any brokerage firm.
Debenture - Debt security of an issuer or a bond by any other name.
Debt Security - Evidence of debt, such as a bond, issued by a corporation, municipality or government.
Deep Discount - Any significant discount from the price of a security. Also used to describe discount stock brokerages which charge commissions far less than what were commonly charged for similar trades only a few years ago. Many of these deep-discount firms apply their lowest commissions to on-line trades made via the Internet.
Default - Occurs when an issuer of a debt obligation fails to make a required payment of interest or principal.
Defensive Strategy - Investment method where an investor seeks to minimize the risk of losing principal. Defensive stocks are generally considered to be established companies in industries relatively unaffected by business cycles.
Deficiency Letter - SEC notification to an issuer that a prospectus or other contemplated filing needs to be modified before being accepted or made "effective" by the agency.
Delivery - Act of transferring security ownership or title from a seller to a buyer.
Delivery Against Payment - When payment and delivery of a security transact simultaneously; often occurs with warrants and options exercising.
Depository Trust Company (DTC) - Self-regulating organization which serves as a central clearinghouse between transfer agents representing issuers of securities and brokerage firms, individual investors and other fiduciaries representing the beneficial owners of securities. The DTC plays a vital role in maintaining the accuracy and safe transfer of securities, not unlike the Federal Reserve in clearing banking transactions.
Depreciation - Accounting concept for a decline in the value of an asset because of use or obsolescence.
Dilution - Reduction in earnings per share of a common stock that occurs when a company issues additional shares.
Director - Person serving on a corporation's board of directors. Directors are considered control persons or insiders for the purpose of fiduciary responsibility and their trading in the securities of the company whose board they serve upon is regulated.
Disclosure - Act of providing appropriate information about a corporation's financial status and other significant operating activity.
Discount - Difference between the price paid for a security and the security's face value.
Discount Broker - Stock brokerage that charges low trading fees or commissions in exchange for providing reduced research and advice. (See "Full-Service Broker")
Discount Rate - Interest rate the Federal Reserve charges its member banks for short-term loans; often used as a benchmark for other institutions charging interest on loans, credit cards and other debts.
Discretionary Account - Account with a brokerage or other financial institution where the client has permitted the firm or account manager to execute trades without obtaining prior permission. (See "Discretionary Order")
Discretionary Order - Order placed at the discretion of an account manager without specific permission from the client. (See "Discretionary Account")
Distribution - Term used to describe any large stock sale to shareholders; often used with a payment from a mutual fund to its shareholders for capital gains, dividends and interest.
Dividend - Payment of a declared distribution in cash or in kind (i.e. stock or other security). When paid, the value of the remaining securities will be adjusted for the amount of the dividend. (See "Ex-Dividend")
Dividend Payout Ratio - Percentage of earnings paid to common stockholders as dividends; electric and telephone utilities tend to possess the highest payout ratios, while young growth companies usually reinvest all earnings and pay no dividends.
Dividend Reinvestment Plan (DRIP) - Plan allowing shareholders to receive dividends automatically in the form of new shares rather than cash.
Dividend Yield - Amount of interest derived from the payment of a dividend. For example, if XYZ Corp. pays a $1.00 dividend to its shareholders four times per year and its stock currently trades for $100 per share, the dividend yield is 4%.
Dollar Cost Averaging - Investment strategy where the same security is purchased periodically in order to achieve an average cost. For example: John Smith purchases 100 shares of XYZ Corp for $80 each on May 1. On June 1, he purchases another 100 shares of XYZ for $60 each. As a result, Mr. Smith now owns 100 shares of XYZ at an average cost of $70 per share. If Mr. Smith later sells 200 shares of XYZ for $75 each, he earns for a total profit of $5 per share on 200 shares even though he purchased the first 100 shares for $80 per share. This strategy is often advocated for long-term investors with regular savings habits, as the market’s long-term overall direction is generally higher
Don’t Know (DK) - A trader's term referring to an unrecognized order or a rejection of a trade confirmation.
Double Bottom - Technical analysis term used to describe a pattern where the price of a security hits a low point, rebounds moderately and hits a similar low point again. Having "double bottomed" without going lower the second time may be an indication that the security has reached its lowest point and is ready to increase in price (See "Double Top")
Double Top - Technical analysis term used to describe a pattern where the price of a security hits a high point, declines moderately and hits a similar high point again. Having "double topped" without going higher the second time may be an indication that the security has reached its highest point and is ready to decrease in price (See "Double Bottom")
Dow Jones Industrial Average (DJIA) - Perhaps the most well-known and often-quoted measure of stock market performance, the DJIA is an index comprised of 30 large industrial companies’ stocks. As a limited indicator of the market as a whole, many professional analysts prefer the Standard & Poor's 500 or other, more diverse indexes for a broad measure of stock market performance. Dow Jones also maintains widely followed indexes for transportation companies (consisting of 20 stocks) and utilities (consisting of 15 stocks).
Dow Theory - Technical analysis based on substantial correlation of the movements of the Dow Jones Industrial, Transportation and Utilities Indexes.
Down Tick - Term describing a trade in a security that was executed at a lower price than the previous trade; same as "Minus Tick."
Due Diligence - Comprehensive and objective financial reports and analysis or the act of conducting research on a public company using such materials.