Before you do trading in a stock market, you have to learn some terminologies about trading. It is difficult for you to trade if you don’t know these simple terminologies.
In this article, I will give you 15 stock trading terms that you will use in trading. Note, this is only fifteen. There is a lot of trading terminologies you will discover as you go further in your trading journey.
WHAT IS STOCK MARKET
Before we begin this article, let us first define what is Stock Market? Stock Market is defines as any exchange that allows investors to buy and sell stocks and also allow companies to issue stocks. The word “Stocks” refers to the company’s equity and shares are pieces of the company.
For example, if I buy 1000 shares of Facebook at $200 and sell it five months later for $220 per shares, I gain profit from it. However, if Facebook stocks is down, I could lose money and we call this as losses.
STOCK MARKET TERMINOLOGIES AND MEANING
1. BLUE CHIPS STOCKS
We define this as shares of very large and well-recognized companies with long history of financial performance. Usually, blue chip stocks has a higher cost because they have a good reputation in markets.
2. BROKER
A broker is a person who buys or sells an investment for you in exchange for a commission. Today, online brokerage company is in high demand as they give more convenience for the investors.
3. DAY TRADING
This is the process of buying and selling stocks in the same day of trading. If you buy in the morning, then you sell before the market close, this is a day trading. If you are active trader then maybe this kind of trading activity is for you.
4. DIVIDEND
Dividend is a portion of a company’s earnings. The shareholders of company receives this kind of earning sometimes quarterly, semi-annually or annually. Some company gave money dividends while others gave a stock dividend.
5. EXCHANGE
This is the place where trading occurs. The most well-known exchanges in the United States are New York Stock Exchange (NYSE) and Nasdaq. Here in the Philippines, we have Philippines Stock Exchange (PSE).
6. INITIAL PUBLIC OFFERING (IPO)
This refers to the process of offering shares of a private corporation to the public in a new stock issuance. This happen when the company open its doors for the first time in the public. This should be under the jurisdiction of Securities and Exchange Commission. The company should follow the strict rules of SEC before issuing an IPO.
7. HIGH
This is the term used to show the highest price point of a certain stock or index.
8. LOW
Low is the exactly opposite of high. I represents the lower price point for a stock or index.
9. OPEN
Open refers to the time at which people can begin trading on a particular exchange. In the Philippines, we have pre-open at 9:00 AM and Market opens at 9:30 AM.
10. CLOSE
Close refers to the time where the market is closing for trading. In United States, the Nasdaq close at 4 P.M. with after-hours trading continuing until 9 P.M. Here in the Philippines, the market close at 3:30 P.M.
11. ORDER
An investor’s bid to buy or sell a certain amount of stock is called Open. In buying a stock or selling it, there is a minimum amount of stocks for it usually 100 shares of stock.
12. PORTFOLIO
Portfolio is the collection of investments owned by an investor. Using online trading platform, you can easily see your portfolio. All of your trading activities and holding stocks are present in your portfolio.
13. STOCK SYMBOL
You have to be familiar with this. This is a one to four letter character alphabetic root symbol that represents a publicly traded company on a stock exchange. Google stock symbol is GOOG while Tesla is TSLA.
14. VOLATILITY
This refers to the price movements of a stock or the stock market as a whole. Some stocks has a high volatility. The price of this stock is extremely going up and down daily.
15. YIELD
This is the measure of the return on an investment that is received from the payment of dividend. Simply, this is you profit.
The Bottom Line
Knowing these stock market terms will make you a better trader. This is one fifteen terms, there is a lot of terms you have to know. Well, experience is the best teacher. If you start trading today, this will be the start of your trading lessons. If you have any questions about trading in stock market, feel free to write your question in the comment section of this article. A smart investor always ask a question.
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