24 Must Know Stock Trading Term Know For Beginners

What is Stock Market?

The Stock Market is Where People buy and sell shares publicly traded companies. The terms refers to all major exchange as a whole.

• Annual Report :  Annual report are inform the Shareholders about the company. It include information like the company's cash flow and management strategy. When you read an annual report, you're judging the company's  solvency and financial situation. 

• Arbitrage : Arbitrage refers to buying and selling the same security on different exchanges and at different price points. If a stock traders at $10 on one exchange and $10.60 on another , you could buy shares for $10 and sell them for $10.60 on the other market. You'd pocket difference as profits.

• Bear Market : A bear market refers to a market environment where a major index or stock falls 20% or more from its recent high. It's the opposite of bull market. more that term in a bit.

• Averaging down : Averaging down means adding to a losing position at a lower price. It increase your position size and lowers your average purchase price.

• Beta : Beta is measurement of a stock's Volatility compared to the overall markets. The markets have a beta of 1. If a stock has a beta of 1.5, it means that for every 1-point move in the market, the stock move 1.5 points. That means the stock's more volatile than the market.

• Blue-chip Stocks : Blue-chip stocks are the stocks of large , industry -leading companies. The expression came from blue gambling chips, the highest-valued chips in casinos.

• Bourse : This stock market term is little murky. Technically , It's another name for the stock market. It originates from a house where wealthy men gathered to trade shares. But in today's terms, it usually refers to the Paris stock exchange or a non-U.S stock exchange.

• Bull market : A bull market is the opposite of a bear market. It refers to a market in a prolonged period of increasing stock prices at least 20% above a recent low. A single stock can be bullish or bearish too. So can a sector.

• Broker : A firm or a person who executes your buy and sell orders for stocks or other securities. A broker is a must for every trader.

• Bid : The amount of money a trader's willing to pay per share for a stock. It's balanced against the ask , which is what a seller wants per share of that same stock.

• Close : The time the market closes. The major exchange close at 4 p.m. Eastern, with after-hours trading continuing until 8 p.m. 

• Day trading : Day trading is the practice of buying and selling a stock or security within the same trading day. This is my go-to trading strategy.

• Dividend : A dividend is a portion of a company's earning paid to shareholders quarterly or annually. Not all companies pay dividend. They're especially rare for penny stock companies since they rarely have profit.

• Exchange : A place where investors and traders buy and sell stocks. The most well-known exchanges in the U.S are the New York stock exchange (NYSE) and Nasdaq. 

• Execution : When your buy or sell order completes, it's called execution. If you put in an order to sell 100 shares, your order executes when all 100 shares are sold.

• High : A high refers to a stock or index reaching a greater price point. A high can refer to a daily ,weekly or monthly high. Stocks near 52-weeks high or all time high can be bullish signal for traders.

• Index : An Index is a benchmark used as a reference market for traders and investors. The Dow Jones Industrial Average (the Dow) and S&P 500 are example of indexes.

• Initial Public Offering (IPO) : An IPO is the first sale or offering of a stock by a company to the public. The Securities Exchange Commission (SEC) Has strict rules for companies issuing an IPO.

• Margins : A margin account lets a trader borrow money from a broker to purchase a stock or asset. Margin is the difference between the loan amount and the securities price.

• Open : The start of the trading day. In the U.S , the stock market opens at 9:30 a.m. Eastern. Premarketing trading begins at 4:30 a.m. Eastern. Note that there's less volume in premarket and after-hours sessions.

• OTC Stocks : OTC stocks trade over-the-counter. They're traded electronically but transactions are less transplant than the major exchanges. Companies listed on the OTC markets are small companies that don't meet the major exchange's listing requirements. They can also be foreign companies.

• Pink Sheet Stocks : Pink sheet stocks are the lowest tier of OTC stocks. They're the sketchiest companies and they typically trade under $5 per share.

• Portfolio : A collection of assets that makes up a trader or investor's portfolio. You can have as few one stock in a portfolio or an infinite amount of stocks or other securities.