Stock Market Terms For Beginners

Ever get tired of having to google the meaning of something every time that you come across a term that you do not understand?

Yeah me too.

SO – to tackle this, I have decided to compose a mini glossary for you to familiarise yourselves with basic stock market terminology.

Buy – Means to buy shares or take a position in a company.

Sell – Getting rid of the shares that are in your ownership.

Ask – is the price that people who want to sell their stocks are looking to get for their shares.

Bid – is what you are willing to pay for a stock.

Ask-Bid Spread– is the difference between what people want to spend and what price people want to get.

Bull – A bull market is a market condition where investors are expecting prices to rise.

Bear – A bear market is a market condition where investors are expecting prices to fall.

Limit Order – A limit order is a type of order which executes at the price placed for buy or sell.

Market Order – A market order is a type of order which executes a trade as quickly as possible at the current market price.

Day Order – is a direction to a broker to execute a trade at a specific price that expires at the end of the trading day.

Volatility – is measure of risk based on the standard deviation of the asset return. 

Going Long – Betting on a stock price increasing.

Averaging Down

A strategy used by investors to reduce the average cost of shares, in which the investor purchases more  shares with a fixed amount of capital as the price of the  shares decreases. The investor receives more shares per  dollar and decreases the average price per share.

Market Capitalisation –

The sum derived from the current stock price per share  times the total number of shares outstanding. 

Although the market cap of a company is an indication of the value of the company, it is only a temporary metric based on the current stock market.

Float – is the number of shares which can be actually traded after deducting the shares held by insiders.

Authorised Shares – are the total number of shares that a company can trade.

IPO – is an Initial Public Offering that happens when a private company becomes a publicly traded company.

Secondary Offering – is another offering in order to sell more stocks and to raise more capital from the public.

Dividend – Portion of the company’s earnings which is paid back to shareholders.

Broker – is a person, entity and/or establishment who executes buy and sell orders on your behalf.

Stock Exchange – is the organised market for trading stocks and bonds.

Portfolio – A collection of investments owned by you.

Margin – allows an individual to borrow additional funds from their broker in order to buy shares.

Sector – A group of stocks in the same sector e.g. financial sector, tech sector, industrial sector etc…

Stock Ticker Symbol – A symbol which represents a company listed on an exchange.

e.g. $AMZN is Amazon’s ticker symbol

Along your investing journey, you will come across many terms which you will need to familiarise yourself with. This mini glossary will help you to understand the most commonly used terms in the financial space of investing in the stock market.

Goodbye to tedious, repetitive google searching! You have most of what you need right here.

As always, happy trading and don’t forget…

… stay wild.


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