Top must-know trading terms for beginners.
Annual Report — informs shareholders about the company and includes information like the company’s cash flow and management strategy.
Arbitrage — refers to buying and selling the same security on different exchanges and at various price points.Averaging Down — means adding to a losing position at a lower price.
Bear Market — refers to a market environment where a major index or stock falls 20% or more from its recent highs. (The opposite of a bull market.)
Beta — a measurement of a stock’s volatility compared to the overall markets.
Blue-Chip Stocks — the stocks of large, industry-leading companies. (The expression came from blue gambling chips, the highest-valued chips in casinos.)
Bourse — technically, it’s another name for the stock market. However, in today’s terms, it usually refers to the Paris stock exchange or a non-U.S. stock exchange.
Bull Market — refers to a market in a prolonged period of increasing stock prices at least 20% above a recent low.
Broker — a firm or person who executes your buy and sell orders for stocks or other securities. Bid — the amount of money a trader’s willing to pay per share for a stock.
Day Trading — buying and selling a stock or security within the same day.
Dividend — a portion of a company’s earnings paid to shareholders quarterly or annually.
Exchange — a place where investors and traders buy and sell stocks.
Execution — the process when your buy or sell order completes.
Haircut
- It can refer to a thin spread between the market maker’s bid and ask.
- It can also refer to the difference between a stock’s value and the amount a bank will recognize as collateral for a loan.
Index — a benchmark used as a reference marker for traders and investors.
Initial Public Offering (IPO) — the first sale or offering of a stock by a company to the public.
Leverage — the process of borrowing capital from your broker to increase profits.
Margin — the difference between the loan amount and the securities price.
Moving Average — an indicator that shows a stock’s average price per share during a specific period.
Order — a trader’s bid to buy or sell a certain amount of stock.
OTC Stocks — are traded electronically, but transactions are less transparent than the major exchanges.
Pink Sheet Stocks — the lowest tier of OTC stocks; they’re the sketchiest companies and typically trade under €5 per share.
Portfolio — a collection of assets that makes up a trader or investor’s portfolio.
Quote — a stock’s latest trading price.
Rally — a rapid increase in the market’s general price or stock price.
Sector — a group of stocks in the same industry belonging to the same sector.
Share Market — any market where traders can buy or sell a company’s shares. (The stock market is an example of a share market.)
Spread — the difference between a stock’s bid and ask price.
Stock Symbol — an alphabetic symbol of one to four characters; it represents a publicly-traded company on a stock exchange. (Example: Apple Inc.’s stock symbol is AAPL.)
Volatility — the price movements of a stock or the stock market as a whole.
Volume — the number of shares of stock traded during a period.
Yield — refers to the measure of the return on an investment, such as a dividend payment.
