This article presents a list of common stock market words, derived from an infographic by Stockstotrade.com, aiming to help readers gain familiarity with the specialized terminology used in the investment industry.
If you closely monitor the stock market, you’ll immediately discover that the majority of analysts use a terminology that is specific to the investment industry. There are special terminology in this language for things that are distinctive to market trading. Gaining knowledge of this trader jargon can help you sound more confident and better equipped to face the markets.
Based on this infographic by Stockstotrade.com, we have put together a list of common stock market words to help you talk the talk and walk the walk.
Averaging Down
Averaging down refers to purchasing more shares of a stock or asset that was already purchased after its price has dropped. The average purchase price of the stock owner is decreased, and their position size is increased.
Arbitrage
Arbitrage is the practice of purchasing stock shares from one market and selling them to another in order to benefit from the unavoidable price discrepancy between the two.
Bear Market
Refers to a market climate where a major stock market index experiences a persistent fall of 20% or more. Fewer traders are willing to buy than are looking to sell their stocks.
Bull Market
When stock values increase by 20% or more, the financial markets are said to be in a bull market. Prices are frequently anticipated to rise steadily.
Blue Chip Stocks
Blue chip stocks are top-tier shares of big, market-dominating businesses with a track record of reliable shareholder returns.
Bid
The sum of money an investor is willing to offer in exchange for shares of stock or another asset is known as a bid.
Bid-Asked Spread
the discrepancy between the asking price and the asking price for each share of stock.
Buyback
A share buyback occurs when a business buys back shares to lower its capital and distribute earnings to investors. As fewer shares are in circulation, the value of the shares that are still in existence rises.
Day Trading
Day trading refers to purchasing and selling stocks quickly, frequently within the same day, in order to capitalize on transient price changes.
Dividend
refers to the quarterly or annual payment of a company’s earnings to its shareholders. Not every business offers dividends. They are uncommon for penny stock businesses since they infrequently generate steady profits.
Close
refers to the market closing time. Trading can go on until 8 p.m. Eastern time even though major exchanges generally close at 4 p.m.
Babysitting
Slang describes keeping onto a trade that has been losing money for a while in the hopes that the price would rise.
Beta
The historical volatility of a stock in a market index is measured by its beta. For instance, a stock with a beta of 1.5 is seen as a riskier investment because it frequently swings by 50% more than the market. A stock is less volatile if its beta value is below 1.
Common Stock
A common stock is an ownership stake. You are entitled to vote at shareholder meetings if you own this kind of shares.
Execution
The process by which your stock trading order is carried out is referred to as execution. Either a purchase or sell order is possible.
Liquidity
a gauge of how quickly and easily stocks may be bought and sold. When several buyers and sellers are actively trading, a stock is typically more liquid, making it simpler to initiate and exit a position.
Volatility
A measurement of the size and frequency of stock price fluctuations. Stocks are deemed to be volatile when their market value changes drastically.
Limit Order
This kind of stock market order specifies whether to purchase or sell a stock at a given price or below it. It allows dealers to set their own prices.
Day Order
When the market closes, an order to purchase or sell shares that wasn’t filled during trading is automatically canceled.
Moving Average
An instrument for technical analysis called a moving average uses daily price variations to analyze and pinpoint trends over a given time frame.
In the end
Finally, one of the essential components of successful trading is overcoming language barriers. Gaining a solid understanding of stock market terminology and basics can help you hone your trading skills and sound like an expert.
