Anyone considering a foray into the world of stock trading should be fully up to speed on all of the important stock market terms and definitions. The stock industry is a place where traders have to know the different terms and definitions in order to execute a transaction properly. Without adequate knowledge on the terminology, a trader could end up executing an incorrect transaction type, causing them to incur huge financial losses as a result. Thankfully, most of the core terms are very easy to understand and conceptualize. A trader really does not need to possess advanced terminology-based knowledge in order to begin trading on most platforms at the novice level.
Top 5 Important Stock Market Terms
- Bear Market — This frequently used term in the world of stock trading refers to downward trending market conditions. A bear market could refer to a downward trending individual stock, a stock index, or the whole stock market.
- Short Selling — Most people are familiar with the simple concept of buying stocks to earn a future return. There is a second way to make money trading stocks called short selling. Short selling is the process of borrowing shares from someone else at a set price in order to earn a return on a stock that drops in value.
- Bull Market — This is another frequently used term that stock traders constantly throw around. It refers to upward trending market conditions. An individual stock could be referred to as a bull market stock if it has been performing well, or the stock market as a whole could be referred to as a bull market.
- Day Trading — This widely used term refers to the practice of buying and selling a high volume of stock during the course of a single trading session. Day traders typically aim to earn a daily profit off a day’s worth of trading, rather than earning from a longer-term strategy.
- Index — Any time the term index is used in reference to the stock market, it refers to a measurement of any given portion of the stock market. It generally reflects an average price of a certain number of selected stocks, typically stocks that are well known or frequently traded. It is used to gauge the overall health of the stock market.
Originally posted on WeeklyMoneyMultiplier.info.