Important Trading Terminologies That You Ought to Know

Trading Terminologies

The trading sector is filled with various kinds of opportunities that investors come forward to exploit. With the aim of earning some stable returns, they tend to make matters possible. But the possibility of returns comes into the picture when you know how to make the right moves. These moves are a result of many incidents or occurrences in the market that has different terminologies associated with it. Be it the Stock market or the Forex market; you can expect to go through a long list of these so-called terminologies. Moving further without the knowledge of these terminologies will not be considered to be a bold move instead a stupid one. So to shed more light on the same, here are a few essential terminologies appearing in the world of stocks and currencies.

The Stock Market


  1. Annual Report – an annual report is a statement that contains information regarding a company’s management strategy and cash flows. By reading this particular Report, you tend to get an idea about the company’s financial situation. It is this Report that investor’s use to think about investing in the company.
  2. Arbitrage – arbitrage refers to the process of buying and selling the same security in different markets but at various price points. This particular method is standard for both the stock market as well as the Forex market.
  3. Back Month – a back month is a form of future’s contract that moves ahead to expire anytime past the current contract month.
  4. Bear Market – a bear market is a term used to indicate a situation in the stock market that displays a downward trend or falling prices.
  5. Beta – beta stands to describe the measurement of a relationship between the price of a stock and the movement of the whole market.
  6. Blue Chip Stocks – this is a terminology used to describe stocks that offer stable and significant dividend payments, having the reputation of being a sound fiscal management. Since these stocks come from large companies, they are called Blue Chip Stocks.
  7. Bull Market – bull market is a term that stands to be the opposite of the bear market. Here the stock market, on the whole, tends to be on a prolonged period of increasing prices.
  8. Broker – an individual who buys or sells an investment on behalf of a client for an exchange known as fees.
  9. Cash Commodity – a physical commodity that someone is buying or selling.
  10. Close – this refers to the time where the stock exchange closes.
  11. Contract – referred to as an agreement between parties indicating future transactions also defined by the futures exchange.
  12. Day Trading – day trading is nothing but the process of buying and selling shares or stocks within the same day. This means that the process of trading ends before the markets close.
  13. Dividend – a dividend is a form of return that is paid to shareholder=s and people who own that particular company’s stock.
  14. Exchange – heard of the New York Stock Exchange (NYSE)? Well, it is one of those places wherein different investments are traded.
  15. High – a high tends to indicate a market milestone where the stock reaches a greater price point.
  16. Index – this term is used to describe a particular benchmark that references a mark for traders and other portfolio managers.
  17. IPO – it stands for Initial Public Offering, and it is the first offering or sale made by a company to the general public.
  18. Margin – a margin is an account that lets a person borrow money from a broker to purchase a particular investment.
  19. Open – this is a simple term that describes the time where people can begin trading. In other words, it refers to the time when the stock market opens.
  20. Pink Sheet Stocks – they refer to penny stocks that are commonly traded at a lower price not exceeding $5.
  21. Portfolio – this term hints at the collection of investments owned by an investor.
  22. Sector – a group of stocks that come from the same industry are known to be a sector.
  23. Share Market – as we all know, share markets are those markets where shares of a particular company are bought and sold.
  24. Spread – it refers to the difference between the amount for which someone is willing to buy a stock and the amount for which some is willing to sell it.
  25. Volatility – refers to the price movements of a stock or the stock market.
  26. Yield – indicates the measure of the return on an investment that was received from the payment of a dividend.


The Forex Market

The Forex Market

  1. Pip – it stands for “percentage in point” and is a measure for exchange rate movement. This unit ultimately measures profit and loss, and Forex traders will often quote these movements.
  2. Leverage – this is a particular ratio that defines the loan amount, margin, that traders use to gain access to larger sums of trading capital. Leverage has the impact to raise both profits and losses, thus needs to be used carefully.
  3. Volume – it refers to the number of lots traded in a currency pair or the entire market within a specific period.
  4. Slippage – this term is used to describe the difference between the price that one expects and the actual price of execution. A situation of this sort is known as slippage. Every trader at the Forex market has witnessed this at least once in their career.


Leave a Reply

Your email address will not be published. Required fields are marked *