The ChoosaBroker Trading Academy
1. An Introduction to Financial Markets (Module 1)
2. Breakdown of Asset Classes (Module 2)
3. Categories of Financial Market Participants (Module 3)
4. Portfolio Management (Module 4)
5. Introduction to Forex (Module 5)
6. Introduction to Stocks and Indices (Module 6)
7. Introduction to Commodities (Module 7)
8. Introduction to CFDs (Module 8)
9. Introduction to ETFs (Module 9)
10. Different Forms of Asset Analysis (Module 10)
11. Basics of Technical Analysis (Module 11)
11.1. How to Identify Support-Resistance Levels 11.2. Understanding Trends 11.3. An Introduction to Classical Chart Patterns 11.4. Overview of Candlestick Patterns 11.5. Different Types of Technical Indicators 11.6. Fibonacci Levels 11.7. How to Build a Trading Plan 11.8. Importance of Controlling Risk in Trading
12. Basics of Meta Trader 4 (Module 13)
13. Advanced Meta Trader 4 Tools (Module 14)
6.2. Commonly Used Terms
Whether you are a newbie investor or a savvy pro, it always helps to have a solid glossary at your fingertips. Here is a succinct list of 50 key terminologies that you will repeatedly encounter in your journey through the stock market.
GLOSSARY OF STOCK MARKET TERMS
- All-or-Nothing Order: An order to buy or sell a security which instructs the broker to fill the order in its entirety or not execute at all.
- Annual Report:A comprehensive publication, including financial statements and a report on operations, which is released by a company at the end of its fiscal year.
- Arbitrage: The simultaneous buying and selling of a stock in two different markets to take advantage of a difference in their pricing.
- Ask:The lowest price that a seller of a stock is willing to accept. Also often referred to as “offer” price.
- Averaging Down: The practice of buying more shares of a stock as its price goes down so that the average purchase price is reduced.
- Basis Point: One-hundredth of a percentage point. For example, the difference between 4.50% and 4.25% is 25 basis points.
- Bear Market: Prolonged period of general decline in stock prices.
- Beta: A measure of volatility in a stock in comparison to the market as a whole. If stock ABC has a beta of 2, it means that for every 1 point move in the underlying market, stock ABC moves by 2 points.
- Bid: The highest price that a buyer is willing to pay for a stock. It is the opposite of “ask.”
- Blue Chip Stocks:Shares of very large companies that have a long history of sound financial performance.
- Book: An electronic record of all pending buy and sell orders related to a particular stock.
- Bull Market:Prolonged period of general rise in stock prices. It is the opposite of a bear market.
- Broker: An individual or an entity that buys or sells shares for you in the stock exchange and charges a fee for the same.
- Certificate: A physical document showing ownership of a stock.
- Closing Price: The final price of a stock at the end of a trading day.
- Commission: The fee charged by a broker or an investment advisor for buying or selling securities on behalf of a client.
- Day Trading: The practice of buying and selling of shares within the same trading session. Traders that participate in day trading are called “day traders.”
- Defensive Stock: Refers to stocks that provide consistent dividends and stable earnings even during the periods of economic downturn.
- Diversification: A risk management technique that seeks to include a wide variety of investments within a portfolio so that adverse movement in any one security does not significantly impact the overall performance of the portfolio.
- Dividend: A portion of earnings that some companies pay back to their shareholders, generally on a quarterly or annualized basis.
- Dollar Cost Averaging: A market strategy whereby a fixed amount of dollars are invested in a specific stock at regular intervals of time. As compared to purchasing a constant number of shares at set intervals, dollar cost averaging results in a lower average cost per share purchased.
- Exchange:An organised and regulated marketplace for buying and selling of shares of companies. The New York Stock Exchange is by far the world’s biggest stock exchange.
- Execution: When an order to buy or sell a stock has been completed, the order is said to have been executed.
- Futures: Exchange traded derivative contracts that enable buying or selling an underlying stock at a future date.
- Good-Till-Cancelled Order:A GTC order is an order to buy or sell a security which remains in effect until it gets executed, or is cancelled by the trader.
- Good-Till-Date Order: A GTD order is a conditional request made to the broker to keep an order in the system until it is either filled or till a specified date, at which time it will get automatically cancelled.
- Growth Stock: Shares of companies that have enjoyed better-than-average earnings and revenue growth over recent years and are expected to continue their outperformance.
- Hedge: The act of limiting the extent of financial loss by taking an offsetting position in a related security.
- Index:A stock index is computed from the prices of selected stocks, typically by calculating their weighted average. Traders and investors track it to get a sense of the broad direction in a market. It is also utilized as a benchmark to compare the returns of a portfolio. The Dow Jones Industrial Average and Standard & Poor’s 500 are two of the world’s most followed stock market indices.
- Initial Public Offering (IPO):A company’s first sale or offering of its shares to the general public.
- Limit Order:An order to buy or sell a stock at a specified price or better. A limit order sets a maximum price the buyer is willing to pay, and a minimum price the seller is willing to accept for it.
- Liquidity: This refers to how easily a stock can be bought or sold in the market.
- Margin:A margin account allows an investor to borrow money from a broker to buy or sell in the stock market. The difference between the amount borrowed, and the total value of the securities transacted, is called the margin.
- Market Capitalization:Represents the total value of a company’s outstanding shares. Market cap is determined by multiplying the number of shares outstanding with the current market price of one share of the company.
- Order: An investor’s bid to buy or sell a certain quantity of a stock.
- Over-The-Counter Market:The OTC market is a network of securities dealers who engage in trading of shares of companies that are not listed on a stock exchange.
- Portfolio: A collection of investments that an investor owns. A model portfolio consists of a diversified basket of stocks and several varieties of fixed income securities.
- Quote: Information relating to a stock’s latest trading price. With the introduction of online trading platforms, stock quotes are now available virtually on a real-time basis.
- Rally: A rapid and substantial rise in the general price level of a market, or of the price of a stock.
- Risk:In stock trading parlance, risk signifies the likelihood of suffering a future loss.
- Sector: A group of stocks that operate within the same business in an economy. A notable example would be the “Technology” sector that includes stocks of companies like Apple, Microsoft and Amazon.
- Short Selling: The act of selling a security that the selling trader does not own. Short selling as a trading strategy is motivated by the belief that a stock’s price will decline in value, enabling the trader to buy it back at a lower price, thereby registering a profit.
- Spread:This is the difference between the bid price and the ask price of a stock.
- Stock Symbol:Denotes a unique series of letters that are assigned to a particular stock for trading purposes. For example, Apple’s stock symbol is AAPL.
- Tick: The market slang for minimum spread. The value of 1 tick depends on the price of a stock, and can be a half-cent, one cent or five cents.
- Thin Market:A market condition during which comparatively fewer bids to buy, or offers to sell, or both, are available.
- Trading Session:The time period during which a stock exchange is open for trading.
- Volatility: A statistical measure of the change in a stock’s price over a defined period of time. Highly volatile stocks exhibit extreme up and down movements and have wide daily trading ranges.
- Volume:</bRefers to the number of shares of a stock traded during a defined time period. Examples include hourly volume, daily volume, weekly volume etc.
- Yield: Percentage measure of the return on an investment. A stock’s yield is calculated by dividing the annual dividend amount received by the stock’s current market price.
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