What are Odd Lots?

An odd lot can be best defined as an irregular number of shares, which cannot be traded in the regular market timings of the Karachi Stock Exchange. Since many investors acquire odd lots and as a result are unable to trade these odd lots in the regular market, the Karachi Stock Exchange has initiated a separate ODD Lots market that is open daily Mon - Fri. during the following timings:

Mon-Thurs. 12:15 pm - 1:45 pm
Friday 10:45 am - 11:45 am

What is Provisional Trading?

Provisional Trading refers to the trading activity that takes place between the time a scrip is formally listed at the Stock Exchange and after it's Initial Public Offering(IPO) has taken place and the subscriptions have been received from the prospective shareholders. During this time trading activity takes place under an informal mechanism before the settlement date of the subscription where all shareholders have to settle their positions with the Stock Exchange against their holdings in the scrip. Provisional Trading helps gauge for the investors the demand and supply situation of the scrip before formal trading starts at the Stock Exchange. The settlement procedure during the provisional trading period is similar to the settlement of Future Contracts.

What are Trading Lots?

A trading lot is an acceptable 'number of shares' that an investor can buy or sell during the regular market hours at the Karachi Stock Exchange. The number of shares in every scrip differs e.g. the tradable lot of PIAA is 500 shares whereas for POL is 100 shares and for Unilever is 10 shares.

What is the difference between 'Margin' and 'Cash' Accounts?

A Margin account is an account where an investor only needs to keep a portion of the funds as a margin of the total amount with the stockbroker to process his/her trades at the Exchange. This means that the customer places a decided percentage (mutually agreed upon between the investor and the broker prior to operating the account) of the funds with the broker against the net total value of his/her trades carried out through that broker at the stock exchange. The margin amount in essence along with the shares purchased serve as collateral that the investor maintains with the broker to carry out his/her transactions. The Margin amount varies from broker to broker. At Akd Trade all customers are required to maintain 20% margin against his/her outstanding trades/exposure for the purpose of trading in his/her/their account.

SECP regulations allows brokers to revise their margin requirements for their account holders if they inform their customers at least 3 days prior to the implementation of the revised margin requirements.

The use of margin accounts provides investors to buy and hold more stock without paying for it in whole.

This can provide investors the advantage to generate higher profits, but it also exposes them to the potential of higher loss.

Cash accounts are different from margin accounts in the way that the amount deposited by the account holder is fully used and the funds deposited stipulate the amount of trading activity that can be conducted in that account. This means that the Account Holder can only buy/sell shares equal to the funds deposited by him/her with the broker.

What is the difference between Delivery Versus Payment (DVP) and Margin Trading?

Margin trading is a type of account used to provide clients with additional funds as a multiple of their cash deposited. If a client places the basic account opening requirement of Rs. 25,000, he/she is provided a trading limit that is five times the amount i.e. Rs. 1,25,000. The basic amount is calculated as 20% of the trading limit.

*AKD Trade is no longer providing margin facility.


Note:
"DVP Account" will be charged Delivery commission does not matter if it is a day trade.

"Margin Account" will be charged Day trade commission when a day trade is performed and will be charged Delivery commission when shares are kept overnight.

If a scrip that is on spot is day traded through "Margin Account", commission will be charged based on the Delivery commission structure.

What is Equity?

Equity is the ownership of shares in a corporation in the form of common stock or preferred stock. It also refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value.

Where can I find research material to review for trading?

Research material is provided on the AKD Trade website. This can be found under 'Research' in the client account on the left hand cornerof the web page. The following are the types of research that are available:

Daily
Stock Smart
Economic Focus

What are Stop Loss Orders?

Stop Loss trading is a form used to prevent unusual and large amounts of losses. It allows the client to place a rate below current market price if there is a drop expected. In this manner, a client can minimize losses by placing a rate as maximum loss.

How long does it take to convert physical shares to CDC shares?

Converting physical shares to CDC shares is a service provided free of charge by AKD Trade for AKD Trade customers. However it should be noted that this process requires three to five weeks, depending on conditions such as public holidays, weekends, other non working days and special circumstances.

What is 'Working Capital'?

Working capital can be calculated as current assets minus current liabilities.

A firm's working capital is the money it has available to meet current obligations (those due in less than a year). A firm with a great deal of working capital is in little danger of failing in the near future, but enormous working capital over a prolonged period could also imply excessively conservative management. Working capital, after all, is short-term in nature and hasn't been put to work in the company's profit-making business operations. As with most measures of corporate well being, this one varies by industry and even by season.

What is 'Total Annualized Return'?

An investment return projected over a one-year period, compounded daily. For example, if an investment returned 1% over one month, it would have an annualized return of approximately 12%. Total annualized return can be useful in assessing the performance of an investment held for a brief period.

What is 'Turnover Ratio'?

A measure of a fund's trading activity, computed by dividing the lesser of purchases or sales (excluding all securities with maturities of less than one year) by average monthly assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year.

What is a 'Symbol'?

A symbol is a unique, market-approved code that identifies a particular security on an exchange. The symbol generally reflects the name of the security. For example, the symbol for the Karachi Electric Supply Corporation stock is KESC. This is also known as the 'ticker symbol'.

What is 'Real Return'?

Real return can be defined as the return on an investment after taking inflation into account. To calculate the real return, simply subtract the inflation rate from the stated return. For instance, a 12 percent annual return in a year of 5 percent inflation results in a 7 percent real return.

What is Relative 'Strength'?

Measures the price performance of a stock in comparison to all other stocks. Many analysts believe that stocks with strong and improving relative strength tend to continue to outperform all other stocks, all other things being equal.

The figure is obtained by calculating the percent price change of a stock over a particular time period and ranking it against all other stocks on a scale of 1 to 100, with 100 being best. Stocks that are ranked from 70 to 100 are considered to have good relative strength, while stocks ranked less than 50 are considered to have poor relative strength.

How can I calculate my 'Return on Investment' (ROI)?

Return on investment is calculated by taking the value of the investment held at the beginning of the ROI period compared to the current value. In other words:

((Current Value) - (Beginning Value) + (Income))
________________________________________________, where
(Beginning Value)

(Current Value) = (the current total shares) x (the last price),

(Beginning Value) = [(Number of shares held prior to the period - any shares sold) x (the closing price prior to the period)] + the "Cost Basis" of any shares added in this period (Buys, Reinvest, Add Shares, etc), and

(Income) = any income events such as Dividends/Interest (not Reinvested) and Realized gain/loss from Sells in this period.

For example, assume that on 1/1/99 you owned 1000 shares of XXYY (which had been purchased prior to this date), the last price (on 12/31/98) was Rs.69 11/32, and you still own the 1000 shares and the current price is Rs.90 1/8. The ROI (YTD) for XXXX Script would be calculated:

[(1000 x 90.125) - (1000 x 69.34375)] / (1000 x 69.34375) = 20781.25/69343.75 = 29.968%

If you had purchased 200 additional shares at Rs.75 each during this period, the formula would be modified as follows:

[(1200 x 90.125) - (1000 x 69.34375 + 200 x 75)] / (1000 x 69.34375 + >200 x 75) = 23806.25/84343.75 = 28.225%

What is 'Revenue'?

All the money (or other items of value) that came into the company during the given period. Revenue includes everything: sales, interest income, proceeds from the sale of a subsidiary and so forth. Revenue is thus one of the most reliable items on the income statement, as opposed to net income, which is subject to various accounting and managerial judgments. But the all-inclusive nature of revenue can make it misleading. If 50 percent of revenue in a given year came from the one-time sale of some land, clearly one shouldn't assume that the business will have similar revenue in future years.

What does 'Quick Ratio' mean?

The sum of cash and receivables from the most recent quarter divided by the total current liabilities from the most recent quarter. This assessment of a company's ability to meet short-term obligations is also known as the acid test. In general, the quick ratio should be 1 or better. A high quick ratio is usually a sign of a solid, conservatively run company in no danger of imminent demise even if for some awful reason sales immediately ceased. A firm's quick ratio might be of special interest to investors anticipating some kind of downturn in the firm's business or the economy at large.

What does YTD stand for?

YTD is an abbreviation for year-to-date.

What is a 'Limit Order'?

When you instruct your broker to buy shares for you at or below a certain price, or sell shares at or above a certain price, you've entered a limit order. Limit orders reduce the risk that an order will be filled at a price you don't like, and best suit the investors' interests in volatile markets. The down side, of course, is that by waiting for your price the stock you want gets away from you, or the stock you want to unload just keeps falling. The opposite of a limit order is a market order, in which the broker is instructed to execute the trade at any market price available.

What does 'Earning per Share' mean?

Net income divided by common shares outstanding. A company that earns Rs.1 million for the year and has a million shares outstanding has an EPS of Rs.1. This EPS figure, which represents how much of earnings each share is entitled to, is important as the basis for various calculations an investor might make in assessing a stock's priciness. The most widely used indicator of whether a stock is over- or undervalued, for example, is the price/earnings (P/E) ratio, which relates share price to earnings per share.

What is a Margin Call Alert?

Margin call alerts can be simply explained as a message sent to the client when his session holdings or exposure exceed his actual cash (Not Trading Limit) by a margin of 30%.

This generally happens when a client using a margin account, utilizes almost all of his trading limit and the value of the scrips held are declining in price per share. As the price declines, it reflects negatively on the actual cash holding (Not Trading Limit). Scrips are organized in nature by classes under margin values (Class A to E that vary from 20% Margin to 100% No Margin). These can be found under 'Portfolio' in the client account.

When the price of a share falls, according to the percentage amount of margin associated to it, deductions are made from the actual cash limit. When the actual cash is reduced by 30%, margin call alerts are sent to clients to either sell of their exposure or a portion of the exposure in order to square off their position.

What is the 'AutoSell' Function?

As explained in 'Margin Call Alert', the fall in price per share affects the amount of total shares of a company held by a client that reflects negatively on the actual cash. However, when the actual cash is reduced by approx. 45%, an autosell function is activated automatically to reduce further losses and to square off client positions. This function sells off a client's session holdings to normalize his losses. As mentioned, this is an automated process, so clients are advised to maintain their holdings in a manner that such a situation is avoided.