FAQ

Frequently Asked Questions

General Information

How do you select the company Before You Invest?

What Do Investors Think For Long-term Investment?

Market Related Information

What are the measures of market performance?

What Investment Products are Available?

What is 'Share' ?

What is 'Market Capitalization' ?

What is 'IPO' ?

What is 'Circuit Breaker' ?

What is 'Odd Lot' ?

What is 'Touchline Price' ?

How orders are queued for trading?

What are the groups of instruments in DSE?

What are the Settlement Rules for different categories instruments?

How can I observe some specific instrument's current traded information from the DSE website in a page?

Technical Information

Should I sell my stock when it makes up more than 10% of my portfolio?

Should I sell my stock when the price declines past its 200-day moving average?

Should I sell my stock when it breaks through lines of support?

General Information

How do you select the company Before You Invest?

Don't put in your money until you have understood all relevant information regarding the investment. Prepare yourself for the vigorous homework of analyzing company's annual reports, EPS (Earning Per Share), accounts and other statements while keeping abreast of what's happening in the industry, country and elsewhere that may affect your investment. Consult your investment adviser/broker to get latest market information about shares you intend to buy or sell. Be skeptical of any thing picked up from rumors, particularly if you cannot rationally explain their choice.

Why Do Investors Think For Long-term Investment?

Bear in mind that even in the best of securities/shares, there can be short-term aberrations. It is important to have the power to hold your investments for longer periods. Studies have shown that investments properly timed and based on strong fundamentals have been very profitable for investors in the longer term.

Market Related Information

What are the measures of market performance?

There are four indicators of market performance:

· Market Capitalization

· Value Turnover

· Traded Volume

· Index

What Investment Products are Available?

The following types of securities are available on the stock market for investment:

· Ordinary shares of listed companies

· Mutual funds

· Debenture

· Bond

What is 'Share' ?

Each share represents a small stake in the total paid up capital of a company. In fact a public limited company is one that is formed to accumulate capital from a large pool of investors. Therefore total capital of such companies is divided into smaller equal denomination units represented by a share/ capital. One may buy large or small lots to match the amount of money that one wants to invest.

A company's share price can rise or fall as a result of its own performance or market conditions. Once the shares are bought and transferred to new investors name, the name will be entered in the company's share register, the new investors will then be entitled to receive all the benefits of share ownership including the rights to receive dividends, to vote at the company's general meetings and to receive the company's reports.

What is 'Market Capitalization' ?

Market Capitalization is the total market value, at the current stock exchange list price of the total number of equity shares issued by a company.

Market Capitalization = ∑ (No. of Issued Share * Close Price)

What is 'IPO' ?

Initial Public offering. IPO means while a company wants to raise fund from the general public, it goes for public offering after completing necessary regulatory compliances.

What is 'Circuit Breaker' ?

Circuit Breaker is the maximum permissible deviation of the price (specified as percentage) of the incoming order from the Circuit Breaker Base Price for that instrument. Orders violating circuit breaker will result rejection of the order.

What is 'Odd Lot' ?

Stock market shares are generally bought and sold in market lots, which are easy to trade. Any number of shares less than the market lot makes an odd lot. Odd lots typically arise from bonus or rights issues.

What is 'Touchline Price' ?

The Touchline Price for an instrument is the best offer (sell) and best bid (buy) price amongst all orders in the order book. The touchline buy price is the highest price amongst all buy orders and the touchline sell price is the lowest price amongst all sell orders.

How orders are queued for trading?

Orders are queued and traded according to first on price and then time priorities. Best-priced orders traded first. If there is more than one order at the same price, the order is placed by time priority.

What are the groups of instruments in DSE?

The groups of instruments in DSE are: A, B, G, N and Z .

What are the Settlement Rules for different categories instruments?

Settlement (Pay Cycle) Rules for different categories instruments are:

How can I observe some specific instrument's current traded information from the DSE website in a page?

You can make a Portfolio on the DSE official website (www.dsebd.org) to observe your desired specific instrument's current traded information all at once. (If you are a new user you have to signup first.). Right now, the registration is free.

Technical Information

Should I sell my stock when it makes up more than 10% of my portfolio?

A price increase in and of itself is no reason to dump a stock. On the other hand, you should also be analyzing your individual holdings in the context of your total portfolio. Your portfolio should always be diversified; if you own more than 10 stocks in equal weights that are in various industries, or you have holdings in diversified mutual funds, you can consider yourself diversified. If a stock holding has become a large percentage of your total portfolio holdings due to good price performance, causing an over-concentration in a sector or industry, you may want to consider paring back the position, taking some profits and redistributing the wealth. But don't unload a stock just because you have already made money on it. Always consider the future merits of a stock before you sell due to a price movement—use the same analysis that led you to buy the stock originally, and reassess based on current stock market conditions and price levels. If the outlook still looks good, keep the stock, but pare it back.

Should I sell my stock when the price declines past its 200-day moving average?

This is a classic "sell signal" for technical analysts. Technical analysis analyzes stocks based on past price movements, rather than looking at the underlying fundamental merits of the company.

The 200-day moving average signal assumes that the trend or the overall direction of the stock price is the real driving force behind the price movement: "The trend is your friend." A 200-day moving average is the sum of the closing stock prices over the past 200 trading days divided by 200, which smoothes the daily price fluctuations to provide a longer-term indication of price movement. The signal assumes that if the current price crosses under the 200-day moving average, a change in the trend of the stock price has occurred, and warrants a sale of the stock. Many investors swear by this basic rule. However, research does not support the use of moving averages.

 Should I sell my stock when it breaks through lines of support?

This is another "sell signal" for technical analysts.

"Support" is a physical trend line drawn on a chart that plots a stock's historical prices; the line is drawn at the level that has seemingly held up the stock's price—in other words, the stock's price repeatedly has touched this level but has not dipped below it.

If a stock's price eventually breaks through this support line, it is a sell signal to technical analysts. For example, assume you purchased a stock at 220/- and the price then increased to over 260/- and continued to trade in a range of prices that never dipped below 240/- thus, support for the stock is 240/-. Suddenly, the price moves below 240/- in a downswing. If you are following trends, this may signal a new trend of the stock and you would sell the stock.

If you are not a technical analyst, you would probably not take this as a signal to sell. However, you should take it as a signal that the stock market may know something about the company that you don't. You should look into the events that caused the dip in the stock's price and determine if they are only temporary, or if they may affect the company's future earnings. Your decision to sell or hang onto the stock should be based on this analysis and not on the price drop alone.

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