Today I’m going to go through some basic stock market terms that every beginner investor should know. In this article we’re going to start off really basic and then gradually work our way to the more advanced terms.
Stock Market Symbol / Ticker Symbol – A short code that represents a company on a stock exchange. For example, Apple’s Symbol is AAPL.
Bull Market – A bull market is a market condition where investors and analysts believe the stock prices will go up.
Bear Market – Opposite to the bull market. This is where investors and analysts believe the stock prices will go down.
Going Long – This is when an investor is essentially placing a bet / trade that the stocks price will increase with the mindset of buying low and selling high.
Going Short – Opposite to going long. This is when an investor places a trade with the mindset that a stocks price will go down. The way they do this is by opening a position by borrowing shares that they don’t own and then selling them to another investor.
Averaging Down ( Buying the Dip ) – Averaging down is the process when you initially buy a stock and the stock price goes down. However, you continue to buy that stock at lower prices effectively reducing your average cost per share.
Broker – A broker, commonly known as Stock Broker is someone that buys and sells shares for you. In the old days, this used to be a physical person but now, we mostly use online websites such as FreeTrade & Trading 212.
Exchange – An exchange is a place in which different investments are traded by the brokers. For example, we have the New York Stock Exchange, The London Stock Exchange and the NASDAQ.
The Open / The Close – This means the opening and closing of the stock markets trading day. Each open and close is conformed by the “ringing of the bell”.
Yield – This refers to the amount of dividend return in percentage you will receive from a company per year.
Sector – This is a group of stocks that in the same business. For example, you have the Technology Sector (Apple, Facebook) and you have Consumer Services Sector (Walmart).
Rally – This is term used to describe a stocks price going up in a short period of time.
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