13 Common Terms used in Stock Market
Common Terms used in Stock Market: Key Takeaways
- Learn these must-know stock market terms before you make a single trade…
- This is the beginning of your new vocabulary — study up!
What’s the best place to start for new investors?
Learn our investing way! If you want to learn how to invest, you need to know what the terms mean so you can follow along. Get all the answers below…
What Is the Stock Market?
The stock market is where people buy and sell shares of public companies listed over on stock exchange. The term refers to all the major exchanges as a whole.
What Are Common Stock Trading Terms?
Stock trading terms are the words used by investors/traders.
Before you study any of my YouTube videos, blog posts, or Facebook page, learn these stock market terms. You must know the basics before you can move on to patterns, strategies, and executing trades. (I’ll tell you what that means later.)
The more you know, the better prepared you can be to tackle the markets. Bookmark this post and return to it often as a handy reference.
13 Common Terms used in Stock Market
Let’s look at some of the most important stock market terms you must know to trade stocks.
1. Annual Report
Annual reports inform shareholders about the company. It includes 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.
2. Bear Market
A bear market refers to a market environment where a major index or stock falls 20% or more from its recent highs. It’s the opposite of a bull market. More on that term in a bit.
3. 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.
4. 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.
5. Broker
A firm or person who executes your buy and sell orders for stocks or other securities. A broker is a must for every trader. Learn how to choose your best broker here.
6. 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.
7. Dividend
A dividend is a portion of a company’s earnings paid to shareholders quarterly or annually. Not all companies pay dividends. They’re especially rare for penny stock companies since they rarely have profits. They are of two types : 1. Bonus, 2. Cash
8. Stock Exchange
A place where investors and traders buy and sell stocks. The most well-known exchanges in the U.S. are the Nepal Stock Exchange (NEPSE).
9. Index
An index is a benchmark used as a reference marker for traders and investors.
10. Initial Public Offering (IPO)
An IPO is the first sale or offering of a stock by a company to the public. The SEBON has strict rules for companies issuing an IPO.
11. Open
The start of the trading day. In Nepal, the stock market opens at 11:00 a.m. Premarket trading begins at 10:30 a.m. Note that there’s less volume in premarket and after-hours sessions.
12. Order
A trader’s bid to buy or sell a certain amount of stock.
13. Portfolio
A collection of assets that makes up a trader or investor’s portfolio. You can have as few as one stock in a portfolio or an infinite amount of stocks or other securities.
14. Sector
A group of stocks in the same industry belong to the same sector. An example is the tech sector, which includes companies like NTC and Unilever. Some traders prefer to trade in a specific sector, especially when sector momentum is hot.
15. Share Market
Any market where traders can buy or sell a company’s shares. The stock market is an example of a share market.
16. Volatility
The price movements of a stock or the stock market as a whole. Highly volatile stocks make extreme movements and make wide intraday price swings.
17. Volume
The number of shares of stock traded during a period. It’s usually measured in average daily trading volume.