57 Stock Market Terms That You Should Know

57 Stock Market Terms That You Should Know

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Understanding the stock market can be difficult at first. To understand the stock market in a better way, you have to understand the stock market terms as much as possible. The more you learn stock market terms, the more you will find yourself ahead in the world of the stock market. Some confusing terms and concepts will put you into frustration, but being acquainted with these terms will surely help you to understand the concept of the stock market broadly eventually.

So let us understand these 57 essential stock market terms that every investor should know:

  1.  Annual Report

Companies prepare annual reports that contain a lot of information from their cash flow to their management strategy. You know about the solvency and financial situation of the company through an annual report from a company. 

  1. Arbitrage

Arbitrage is an act of purchasing identical security, commodity, or currency from one market and selling it in another market at the same time. Investors can make profits from the temporary difference in cost per share. 

  1. Averaging Down

Averaging down refers to the investing strategy to buy additional shares of a stock you already own after its price has dropped.

  1. Averaging Up

Average up can be defined as the process to buy additional shares of a previously purchased stock at a higher price. 

  1. Beta

Beta refers to a measurement of the relationship between the price of a stock and the movement of the whole market.

  1. Bourse

It is just another name for the stock market, derived from a house where wealthy men come together for trading shares. In today’s time, it usually either refers to the Paris stock exchange or to a stock market in a country that doesn’t speak English, especially France.

  1. Bull Market

A bull market is a situation where the prices of the stocks are rising or are expected to rise.

  1. Bullish

Bullish is an investor who believes a stock or the overall market will rise.

  1. Bear Market

A bear market is a situation where the prices of the stocks are falling or are expected to fall.

  1.  Bearish

Bearish is an investor who believes a stock or the overall market will fall.

  1.  Broker

A broker is a person who trades in the stock market on behalf of you for which they charge you. 

  1.  Bid

The bid is the price that an investor wants to pay per share for a particular stock.

  1.  Close

The close can be defined as the time at which a stock exchange gets close to trading.

  1.  Dividend

The dividend is a portion of the profits and earnings of the company that is paid to its shareholders regularly or annually. All companies don’t pay dividends. 

  1.  Exchange

An exchange is referred to as a marketplace where individuals or stockbrokers can buy and sell securities, commodities, derivatives, and other financial instruments.

  1.  Day Trading

Day trading is the practice of trading financial assets after the opening and before the closing of the market within the same day. 

  1.  Day Traders 

Day traders or active traders are those investors who take part in day trading.

  1.  Execution

Execution can be defined as the completion of an order of buying or selling of security placed by an investor. 

  1.  Haircut

The haircut can be defined as the difference between the current market value of a security and its value calculated for pledging as collateral. The value reduction is expressed as a percentage.

  1.  High

The high is the highest price of a stock at which it is traded during the course of the trading day. 

  1.  Low

The low is the lowest price of a stock at which it is traded during the course of the trading day. 

  1.  Leverage

Leverage is a trading mechanism that can help you increase your exposure to a financial market where you require no extra investment capital. 

  1.  Margin

Margin can be defined as the money borrowed from a broker to make an investment. It is actually the difference between the total value of an investment and the loan amount. 

  1.  Margin trading

Margin trading is the practice of buying more stocks than you can afford. Margin trading is known as intraday trading in India. Such service is offered by various stock brokers. 

  1.  Index

The index is commonly known as stock index or stock market index that measures a stock market and or a subset of the stock market. You can see changes that take place in the stock market. You can calculate the market performance by comparing the current price levels with the past prices. 

  1.  Moving Average

Moving Average is a trend indicator that shows an average of closing prices in a time frame, helping investors and traders to understand the trend direction of securities.

  1.  Open

The close can be defined as the time at which a stock exchange gets open for trading.

  1.  Order

Order can be defined as the bid of an investor to buy or sell stocks, currencies, futures, commodities, options, bonds, and other assets. You have to place an order to trade in a stock exchange. 

  1.  Pin Sheet Stocks

Pink sheet stocks can be defined as securities that you can trade on over-the-counter (OTC) platforms such as OTC Markets.

  1.  Pink Sheets

Pink sheets refer to listings for stocks that you can trade over-the-counter (OTC) in the U.S, not on a major stock exchange.

  1.  Portfolio

A portfolio can be defined as a collection of financial investments that include stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

  1.  Quote

A quote can be defined as the quoted price of an asset on an exchange.

  1.  Rally

A rally can be defined as a period of sustained increases in the prices of financial assets, or related indexes.

  1.  Sector

The sector can be defined as a term that investors apply for investment categorization in a particular area of stocks.

  1.  Short Selling

Short selling can be defined as a trading strategy to speculate on the decline in the prices of stocks.

  1.  Spread

Spread can be defined as the difference between the bid and the ask prices of a stock. It is the amount for which investors want to buy it. It is the amount for which investors want to sell it. 

  1.  Stock Symbol

A stock symbol can be defined as a unique series of letters or numbers used to identify stock, bond, mutual fund, ETF, or other securities that are traded on a stock exchange. It is also known as a ticker symbol. 

  1.  Volatility

Volatility can be defined as the amount of risk associated with the size changes in the value of a market and security. 

  1.  Trading Volume

Trading volume can be defined as a measure of the number of shares of security traded during a specific time period. 

  1.  Yield

Yield can be defined as the return received by investors from a company for their investments in a financial instrument over a specific period of time, denoted as a percentage.

  1.  Agent

An agent can be a brokerage firm or a single person who buys or sells shares on behalf of you.

  1.  Ask/Offer

The ask is the price a seller wants to accept for security. It is commonly known as the offer price. 

  1.  Assets

Assets can be defined as the property ( cash, equipment, land, technology, etc.) owned by the company. 

  1.  At the Money

At the Money is a situation where the price of the options strike and the underlying securities are the same. 

  1.  Board Lot

A board Lot can be defined as a standardized number of securities defined as a trading unit by a stock exchange. 

  1.  Bonds

Bonds can be defined as investment securities by which an entity can raise funds and fulfill capital requirements. 

  1.  Trading Book

A trading book can be defined as a collection of several fiscal instruments maintained by a broking firm or a bank. 

  1.  Price Level 

The price level can be defined as the average of the current prices across the full spectrum of goods and services in an economy. 

  1.  Order Book 

An order book can be defined as an electronic book that contains the list of buy and sell orders for a particular financial asset organized by price level. 

  1.  Call Option

Call options can be defined as financial contracts by which the holder buys a stock, bond, commodity, or other financial instruments at a specified period within a specific time period. 

  1.  Close Price

The close price is referred to as the final price at which a stock is traded on a particular trading day.

  1.  Convertible Securities

Convertible securities (bonds, debentures, preferred stocks) can be defined as a financial asset whose holder can convert it into another security of the same issuer. 

  1.  Debentures

An unsecured bond is known as a debenture. Although all debentures are bonds, not all bonds are debentures. Lenders like banks use such financial instruments when they provide capital to companies and individuals. 

  1.  Defensive Stock

Defensive stocks can be defined as stocks that provide constant dividends regardless of the fluctuations in the stock market. 

  1.  Delta

Delta is the ratio where there will be a comparison between the change in the price of the underlying asset and the corresponding change in the price of a derivative. 

  1.  Face value

Par value is just another name for Face value. Face value can be defined as the value of the company listing in its books and share certificates. 

  1.  One-sided Market

A one-way market is just another name for a one-sided market. It is a market for a stock that allows market makers to only quote either the bid or the ask price.

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