Terms You Should Know & Useful Tips
Terminology and useful tips.
Limit up and Limit down. Also called Stop Up/Stop Down.
This rule is created by Japan Exchange Group. Once a stock price reaches a pre-set limit up/down price, the trading for the stock will stop on the day (current price range limit is shown in the below table) A price limit is an established amount in which a price may increase or decrease in any single trading day from the previous day’s settlement price.
If the stock experience a limit up/down for two consecutive business days, the price range of the limit up/down is expanded on the 3rd day. On the 3rd day, the range of price increase or decrease is 4x of the standard price range. This rule is in place, to protect the investors from substantial price changes. Especially when the price keeps going down, selling calls for more selling, and there is a possibility that investors will not be able to make a property judgement.
Koubo (Public Offering)
Public offering is to have investors buy newly issued shares and proceed with fund raising. At the time of IPO, there is another type of share sale. This is called “Uri dashi/Sale” which is explained below.
Uri dashi (Sale)
Uri dashi is a type of sale in which investors buy some of the share which are held by the major shareholders, such as founders. Since the company does not issue new shares under “Uri dashi), no new funds are raised which is a major difference from Koubo. Since Uri dashi is used to realize (secure) the gains of major shareholders, investors tend to avoid an IPO with large Uri dashi shares.
OA (Over-allotment)
If IPO buy demand exceeds the quantity of public offering or sale (oversubscribed), the lead manager once borrows shares from shareholders and asks investors to buy additional shares. OA is limited to 15% of the number of public offerings and Uri dashi.
Lock-up
Lock up is set so that large numbers of sell orders do not come from major shareholders during a certain period of time (lock up period). The period is often “unlocked” once the shares appreciate to the preset price level.
Source: IPOkiso.com
IPO Secondary
IPO secondary should not be confused with Secondary
Offerings or Secondary Markets. IPO Secondary refers to the period after the
initial IPO pop. Newly IPOed shares tend
to retrace back to the lower share prices after the first couple weeks. Some shares even start to decelerate after
the first couple days. Yet, there are the stocks which form IPO base
(institutional due diligence/consolidation phase) a while and resume ascending
trends to IPO Advance Phase, if the company’s fundamentals are solid. IPO
Secondary traders will look for these stocks which can reach these steady upward
phases.
Importance of Trading Volume
You have created a Watch Stock list, based on your rigorous due diligence. However, the share prices of a few of these stocks are on a constant downward trend, despite they are reporting great sales and profit numbers quarter after quarter.
In the below table, JTower (ticker: 4485) shows an increase in sales (noted as earnings in the table) and operating income for the last two years. JTower mainly provides sharable in-building cell towers in Japan. 
(Source: www.buffet-code.com)
However, the stock chart depicts a different story (shown below). In Jan/2021, the stock reached its 12 month high of Y(en) 12,670 (around $127 using a rough exchange rate of Y100/$). However, after that, the stock kept going down and reached its lowest price of Y4755 in June/2021. Why? 
(Source: www.buffet-code.com)
This was because that the balance of Outstanding buying on margin were high. Investors buy a stock with margin hoping the stock to appreciate, but the stock went down. The investor has unrealized losses and can’t sell it since he/she does not want for losses to be realized. Therefore, sell potential in near term is high. Since when the stock goes up a bit, the investor sells it into the slight strength to avoid the forced settlement in the 6 months period. Stocks bought on the margin needs to be settled in 6 months. This creates the constant selling pressure to the stock.
Margin transactions are used, for an example, when an investor considers that the stock price of a certain issue will rise or decline in a short period of time. When it is expected that the stock price will rise, an investor borrows funds from securities companies for purchasing the stock (margin buying), and if the stock price rises as expected within a term of repayment (6 months), the investor sells the stock, repays the funds borrowed (reverse transaction) and receives the margin. Conversely, when it is expected that the stock price will decline, an investor borrows stocks from securities companies and sell them (margin selling). If the stock price declines as expected within the term of repayment (6 months), the investor buys back the stock, returns it to securities companies and receives the margin. The investor may also receives the equivalent money to the price sold by procuring stocks separately and offering them to the securities companies (actual delivery).
Going back to JTower. Orange horizontal bars at the right of stock price chart above represents transaction volumes of the stock at each share price. The long bars at the price range of around Y8350 indicate that many share holders hold JTower at Y8350. That explains why the stock was range-bounded at the price from Feb/21 through the beginning of April/21. It appeared that the buy volume could not absorb all the sellers and the stock could not take off after the consolidation at Y8350 but kept descending to 6680 where it formed another base. At the price, the sufficient trading was done to accommodate the last group of sellers and started to form a steady upward trend.
A good trend is also seen in the below table of outstanding margin buy and sell volume. Unit is 1000 shares. Translation of the heading: From the left: date, margin sell volume, margin buy volume, the ratio of buy to sell. The ratio is coming down which means that margin buyers relative to margin sellers are decreasing which bodes well for the stock’s continuing upward trajectory.
(Source: www.kabutan.jp.com).
Bottom Line. Before initiating any buy trade, It is critical to see if the sufficient buy trading have been executed to absorb the eager sellers who are itching to convert their unrealized losses to realized gains