The stock market consists of public corporations that have shares or owner interest available for the public. Investors may buy or sell shares of any given company on the stock market. There are many companies that have restrictions for buying or selling stocks, but those are specialty stocks like penny stocks, pink sheets or forex trading. If you do not know what any of those are, it is okay. Everyone starts somewhere and it is important to have your basics down before moving on to move complicated things like derivatives trading or swap equity positions.
Important Beginner Stock Market Vocabulary
For the purposes of this post, we will focus on the important stock market vocabulary that any beginner should have a working knowledge. Now, this is not to say that because you understand these terms, you will make a great investor. You still have to research stocks that would work for you like Intuit stock, Apple stock or EMR stock. Keep in mind, that even the most experienced investors often lose money because of unforeseen factors or conditions. No doubt, the stock market can be a risky investment. It can also be conservative if done correctly. But that is for another time.
Understand Trading Tips
At least, taking the time to learn the basic stock market vocabulary will help you get started in learning about the market overall. This way you can understand trading tips when you are reading an official investment website. Or learning how to trade online. If that is not a good enough reason for you, perhaps this next one is. By learning the fundamentals of the stock market language, you will at least be able to hold a conversation with someone who does active investing. This way, if you go to someone for their opinion or thoughts, you have a solid idea of what they were talking about.
Conceptualize Not Memorize
The best way to study stock market terminology is not just memorization. Once you have mastered memorization, reading about how the concepts are applied is equally important. This is especially true if you plan to use one of the online broker options instead of heading to an investment advisor. To fully grasp the vocabulary, it always helps to see how the concept is used in real life to make or lose money. Furthermore, you will find concept easier to understand if you relate them back to a specific company. This way, you can look up the terms and see how they’re used on an everyday basis by analysts, traders and investors at large.
Must Know Stock Market Terms
Here are some of the important stock market terms you want to know right from the start, regardless of whether you invest with Brigade Capital or some other brokerage firm:
Averaging Down – When an individual investor buys more of a stock as the stock price decreases. This strategy causes the investor’s average purchase price for that particular stock to go down too. Clearly, this is a strategy that can help to improve stock market returns. So, it is certainly one to keep in mind.
Stock – This is the unit used, in addition to shares, to measure an individual’s holdings or equity in a particular company.
Order – Just how you order merchandise, this is your order to either buy or sell a stock. You can either place an order to execute at live market time or schedule it to execute at a specific price.
Execution – This occurs when an order has been completed, resulting in the purchase or sale of stocks.
Ask or Offer – When researching stocks, You might see and ask or offer price. These are currently the prices that are either being asked or offered by traders right now.
Commission – The fees that you must pay in order to execute a trade maybe referred to as a commission or transaction fees. You will be required to pay these if you use the services of the Investment Counselors of Maryland or a similar brokerage firm.
Annual Report – The yearly audit report that companies present to stockholders regarding all their financial information.
Bid Price – The asking price of a stock or share.
Dividend – The amount of a company’s profits that is given to their shareholders.
Portfolio – The term given to an individual’s assortment of holdings. More simply, the collection of stocks or shares that an individual owns.
These basic terms of the stock market help you to get started in buying and selling stocks as a first time investor. As you learn more, you may want to learn about short sales, options trading, commodities, futures and foreign currency exchange. In the finance industry, there are thousands of ways to participate in the stock market.
If you have more questions, please email us with the stock market vocabulary that you are interested in learning more about. We will be happy to publish a post with further details. Thanks for reading and we wish you the best of luck on learning more about the stock market.
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