Understand the roles of XM and CA in stock trading

What is CA and Why Is It Important to Know

When opening a stock trading platform, you may notice strange abbreviations appended to stock names, such as CA, XM, XD, XN, and many others. These are not just random letters without meaning but are “warning signals” indicating that the stock is about to undergo a significant change within the next 7 days.

CA stands for “Corporate Action,” which refers to actions taken by the company. This includes events announced by the company such as dividend payments, capital increases, or shareholder meetings. When you click on CA, you can see details about what event will occur and when.

Why Investors Should Pay Attention to XM

XM stands for “Excluding Meetings,” meaning that if you buy the stock after it has gone XM, you will not have the right to participate in the next shareholder meeting. This meeting is an important opportunity for shareholders to influence the company’s direction, including voting for board members.

Understanding XM is crucial because it helps investors know what rights they will or will not have. Buying stocks at the right time is just as important as choosing good stocks.

The X Family - “Not Received” Signals to Watch Out For

Besides XM, there are several other X-letter signals that investors need to understand:

XD (Excluding Dividend) - If you buy after the stock has gone XD, you will not receive dividends. However, if you buy before XD and hold until the next XD round, you will be entitled to receive dividends in the next cycle.

XW (Excluding Warrant) - You will lose the right to purchase Warrant stocks, which are additional benefits offered by the company.

XR (Excluding Right) - You will not have the right to subscribe for additional capital increase shares, which are often opportunities for existing shareholders to buy new shares at a special price.

XN (Excluding Capital Return) - You will not receive a return of capital due to capital reduction.

There are also other signals such as XI (Interest), XP (Principal), XA (All Rights), XE (Conversion Rights), XT (Transfer Rights), and XS (Short-term Warrant Shares) that investors should understand.

Level T - Warning signals for abnormal stocks

When a stock surges abnormally and carries high risk, the stock exchange will implement restrictions, indicated by the letter T appended to the stock, divided into three levels:

T1 (Trading Alert Level 1) - The first level of warning. The stock must be purchased with cash only. (Cash Balance) will display this sign 3 weeks after announcement.

T2 (Trading Alert Level 2) - If the stock still meets the criteria after one month, it escalates to T2. In addition to requiring cash, the stock cannot be used as collateral.

T3 (Trading Alert Level 3) - The highest level. Besides the above restrictions, net settlement (Settlement) is also prohibited on the same day, meaning that after selling the stock, the buying power will be restored the next day, not immediately.

Other Warning Signs to Avoid

Besides the X family and T signals, there are other warning signs indicating high risk:

H (Trading Halt) - The stock trading is temporarily halted for one session due to the release of important news that has not yet been officially disclosed to the stock exchange.

SP (Trading Suspension) - The stock trading is halted for more than one session, indicating a more severe situation than H.

NC (Non-Compliance) - The company may be delisted from the stock exchange, possibly due to continuous losses or failure to submit financial statements. The company has 1 year to rectify this.

C (Caution) - A warning that the company is experiencing financial problems and is at high risk, such as having less than 50% of paid-up capital in shareholders’ equity or a court petition for business rehabilitation.

NP and NR - NP indicates the company has information to report; NR means the stock exchange has received the report.

ST (Stabilization) - The stock is maintaining price stability, often occurring shortly after an IPO.

How Understanding These Signs Is Important for Investing

Understanding these signals is not just additional knowledge but a protective tool for investors, especially beginners entering the stock market.

When you see CA, you should click to see what event is happening and when it will occur. Your buy/sell decisions should be influenced by this information.

For XM and other X-family signals, knowing what rights you will lose if you buy during that period helps you make smarter decisions.

Signals like T1, T2, T3, and other warning signs are indicators to be cautious because they often signify higher risks. Being cautious and studying more information before investing is very important.

Ultimately, stock investing always carries risks. Whether you are a beginner or a professional, learning and understanding these signals is the first step toward building a solid investment foundation.