If you’re new to the stock market, terms like over-the-counter, liquidity, and federal reserve might sound like gibberish. But understanding these terms is crucial for anyone looking to make informed investment decisions. In my experience, knowing the lingo can make or break your ability to navigate the markets successfully. EPS is often reported in news articles and is a frequent topic during earnings calls. A rise or decline in EPS can significantly affect the share price.
Different Types of Mutual Funds in India
The act of buying and selling of stocks within a day is called intraday trading. Traders who trade intraday are often called speculators of the market. These traders 40 stock market terms aim to profit from the tiniest fluctuation in the price of a stock. Volume-Weighted Average Price (VWAP) is a technical indicator used for intraday trading.
Special Purpose Acquisition Company (SPAC)
Yield has been used as a measure to calculate return on investments for decades and is one of the most common terms used in the stock market. Volume is the addition of the total number of daily buy and sell orders executed within a stock. Volume is also used by traders as a technical indicator for defining the area of significance in the price chart of a stock.
Going Short
The term “Shares” comes from an old English word “scearu” which means “a portion or a part”. This term was first used when the Dutch East India Company issued their shares to the public in 1602. Since then, the term is used to describe an ownership in companies. A sector is a grouping of companies in the stock market that are working in a similar business. Different stock market sectors are affected by different kinds of policies and news.
Cost Of Debt
Large-cap stocks are more frequently traded and usually represent well-established, stable companies. In contrast, small-cap stocks often belong to newer, growth-oriented firms and tend https://www.trading-market.org/ to be more volatile. Today’s infographic comes to us from StocksToTrade.com, and it covers the most important stock market terms that every new investor should know and understand.
The first usage of this spread dates back to the very beginnings of the stock market. Beta is a measure which compares a stock’s historical volatility to the overall market. A beta of higher than 1 shows that the stock is more volatile and a beta less than 1 shows that the stock is less volatile compared to the overall market. Arbitrage is a very simple yet an effective profit-making strategy for beginners. Use our practical tips, interactive tools and expert strategies to make sound financial decisions.
Trading Volume
- Such sets may be based on published indexes such as the S&P 500 Composite index or may be customized to suit a particular investment strategy.
- However, investors generally trade common stocks rather than preferred stocks.
- In a brokerage account, equity equals the value of the account’s securities minus any money borrowed from a brokerage firm in a margin account.
- It is also given much importance by experienced traders as it is one of the oldest yet effective technical indicators in the stock market.
- Yearly record of a publicly held company’s financial condition.
Going long as a term is used to assert an investor’s bullish view in a stock. It also indicates an investor’s ownership in the underlying stock. This ratio is centered around the very core of a company’s fundamental analysis. This term is commonly used as it is a very fundamental part of the corporate’s financial structure.
In simple words, profit margin tells the investors the degree to which a company is profitable after carrying out business operations. It is calculated by dividing a company’s net income by its total revenue. Price quote is often referred to as the latest trading price of a stock or in other words, the last trading price a stock was available for buying or selling. They also show information about a stock’s day high, day low, average volume traded in a day, etc. Preferred stocks, also known as preferential shares are the shares of a company which has the features of an ordinary stock as well as a bond. Preferred stockholders have a higher claim on the assets of a company.
Stock market terms also provide a common language for discussing strategies and sharing insights with others in the trading community. From my experience, I can attest that a solid understanding of these terms is a foundational element in developing effective trading strategies. Every publicly traded company submits the 10-K annual report to inform the shareholders about the company’s performance. The 10-K is required by the SEC and includes financial information, a balance sheet, an income statement, and a cash flow statement. Additionally, business operations, outlook, and potential risks must be outlined. Firstly, it provides capital for new companies to fuel their growth via an IPO.
In the stock market, buyback as a term is used to describe the action of a company buying back its own excess shares. Bull market is a market situation where the prices of stocks continue to increase over a prolonged period. A bull market generally lasts more than a bear market and it can be identified when the prices of stocks rise by 20% or more from their recent lows. This happens due to optimism in the market participants due to an economic boom.
Volume is a measure of how much a certain stock or other investment has been traded over a certain period of time. Volume is a critical component of strategically analyzing stock market trends, and is often used to determine market strength. Preferred stock is a type of stock that combines characteristics of both common stock and bonds.
In simple words, a broker executes orders on behalf of the investors. Nowadays, investors and traders can execute their orders directly from their broker’s website or app. Hedge funds are privately owned financial partnerships that use the capital of its investors to deploy various investment strategies. Profit margin has been used as a profitability ratio of a company for decades. A beginner should understand this concept because it gives him/her a deep dive into the company’s fundamentals. Profit margin is an important part of a company’s overall analysis.
