Every industry comes with its own set of jargon, so regardless of whether you’re a veteran trader or a beginner, it’s important to know these terms and their meaning. Stocks and shares are traded quite quickly, so it can also help to have a list ready to refer to if the vernacular is unclear.
Becoming an expert trader will also require you to know the stock market terminology to have a better understanding of the market. So if you’re going to start trading in stocks and shares, make sure that you get comfortable with the terminology before you make that initial trade.
When it comes to investing, the list of terms that you need to know can go into the hundreds. But there are some key terms that keep coming up often.
The price a seller is willing to accept for a share of stock.
When you buy more stocks as the price falls, your average purchase price also decreases.
Application of a strategy to historical data to test its validity.
This is when stocks and shares start decreasing in value. A bull market, on the other hand, is the opposite of the bear market.
Basically a portion of company profits that are paid out to the shareholders.
To better understand the stock’s value, the company’s profit is divided by the number of outstanding shares currently on the market.
This is used to offset your position and limit your losses.
Like the term suggests, it’s the first time the company’s stocks and shares are made available to the public.
This is when you borrow money from a broker to purchase stock.
A collection of all investments or a single investment that’s held by an investor.
This is a calculation that’s done by dividing the stock price by earnings per share. This calculation is performed to ascertain stock costs relative to the company’s earnings per share.
This is when the price of a stock rapidly increases in value.
This is used to limit losses by setting a price to buy or sell a stock. So when the stock reaches the set price, the order turns into a market order.
This is when a stock’s price rises.
This is how much a share price fluctuates over a period of time.