10 Stock Trading Terms You Need to Know
It's no secret that every profession has its own special words and professional slang, which is understandable only to those who have worked in the sphere for a long time. The stock market is no exception, and stock trading definitions are quite complex. To help you get comfortable in this environment, we have compiled the FXOpen trader's dictionary, which explains the most important basic trading terms.
These are the most commonly used terms in the stock market. Mostly, stock, share, and equity are interchangeable. Still, they have differences.
▪️Stocks generally stand for a portion of ownership in numerous companies. A person may say that they own stocks in Tesla and Amazon.
▪️Shares reflect portions of ownership of a particular corporation. Here it’s right to say that a person owns 100 Tesla shares.
▪️Equities refer to the total ownership stake. In particular, if a corporation issues 1,000 shares, and a person owns 100 of them, they hold a 10% equity stake.
2. Ask - an ask price is the supply price or the minimum price at which the seller agrees to sell a stock.
3. Bid - a bid price is the demand price or the maximum price at which the buyer agrees to buy a stock.
4. Spread - the difference between the demand price (bid) and the offer price (ask).
5. Exchange - an exchange is a platform on which securities, derivatives and other financial instruments are traded.
6. Broker- a broker is a firm or a person acting on behalf of its clients. Brokers are intermediaries in deal-making on stock exchanges.
7. Bull/Bear Market: There are two main types of market trends: bullish and bearish. Bull markets are a time when the price of an asset rises. Bear markets are periods when the price of financial assets falls.
8. Earnings Report: Earnings reports are submitted by public companies every three months to publish their financial data.
9. Volatility is a statistical financial indicator that characterises price variability.
10. Yield is more common for investing. It reflects how much income an investment brings over a specific period.
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CFDs are complex instruments and come with a high risk of losing your money.