Basic terms used in the stock market

 

 

Basic terms used in the stock market

 

Buy – Means to buys shares or take position in a company.

Sell – Getting rid of the shares as you have achieved your goal or want to cut down losses.

Ask – Ask is what people who are looking to sell their stocks are looking to get for their shares.

Bid – Bid is what you are willing to pay for a stock.

Ask-Bid Spread– Spread is the difference between what people want to spend and what people want to get.

Bull – A bull market is a market condition where investors are expecting prices to rise.

Bear – A bear market is a market condition where investors are expecting prices to fall.

Limit Order – A limit order is a type of order which executes at the price placed for buy or sell.

Market Order – A market order is a type of order which executes as quickly as possible at the market price.

Day Order – A day order is a direction to a broker to execute a trade at a specific price that expires at the end of the trading day if it is not complicated.

Volatility – Means how fast a stock moves up or down.

Going Long – Betting on the stock price will increase so that you can buy low and sell high.

Averaging Down – This is when an investor buys as the stock goes down so as to increase the price at which purchased.

Capitalization – This is what the market thinks a company’s value is.

Float – This is the number of shares which can be actually traded after deducting the shares held by insiders.

Authorized Shares – This is the total number of shares that a company can trade.

IPO – It is an Initial Public Offering that happens when the private company becomes a publicly traded company.

Secondary Offering – This is another offering in order to sell more stocks and to raise more money form the public.

Dividend – Portion of the company’s earning which is paid to the shareholders.

Broker – A broker is a person who buy or sell stocks on your behalf.

Exchange – An exchange is a place where different types of investment are traded.

Portfolio – A collection of investments owned by you.

Margin – Margin account lets a person to borrow money from the broker to buy shares.

Sector – A group of stocks in the same sector.

Stock Symbol – A one to three character alphabet root symbol which represents a company listed on the exchange.