Common stock market terms – how to "speak" like a professional!
When trying to enter the stock market, one thing that intimidates people is the number of foreign terms that seem to be foreign. Knowing each method can help traders and help understand what is happening in the market. If this is known, you can make the right trade and investment decisions to increase your profit potential. Here are some of the more common words you will find when dealing with the stock market.
Stock (or stock) – these are the most common deals in various stock markets. By buying the company's stock, you are technically a part of the owner, although it may be a small part. These stocks (or stocks, because these two terms are synonyms) are publicly traded. By having a stake in the company, you have the right to share the profits of the company. You also have the right to vote on certain corporate decisions made at the shareholders' general meeting.
Broker – This is the person who actually negotiates the stock you are interested in. He or she is "middleman" can say. The full service broker provides advice and guidance to the investor and provides any information about the investor who is interested in investing in the decision of the investment decision. A starting stock trader should pass one of them. Discount brokers prove very little, if any, information or advice. They only buy or sell the stock there. If you are knowledgeable and do not need any information to make your decision, this type of broker is for you! Bulls – This is a word It is the stock market slang for the value of the rise Market (usually in a few weeks or months). In the bull market, investors become optimistic, usually buying stocks instead of selling stocks.
Bear Market – This is contrary to bull market, the market in a few weeks or months of time the value of the gradual decline. This means that investors are often quite pessimistic, will sell more stocks, rather than buy more.
Dividends – When companies earn profits they are obliged to provide some profit to shareholders. Profit is divided into a certain amount per share. So if you have a stock in a company, it's the money you get, no matter what the current market is doing. Many companies have a DRIP system that represents a dividend reinvestment plan, rather than sending you a dividend, but paying you all dividends and buying more shares for you. If you invest in a profitable company, this may be your best long term decision!
Day Trader – This is a person has a very positive trading style. They tend to buy and sell stocks many times a day, looking for many small profits. These profits are always accumulated in the course of the day, but this transaction can be very dangerous. This is just a very experienced trader!
Trading Margin – When you are in the Margin Trading, you do not pay the full amount of the stock, but you are only down payment. The remaining funds to buy the stock can come from the brokerage firm (or bank) you are dealing with. When you actually sell the stock in the future, you will pay the remaining cost. For example, a trader can buy 1000 shares, each $ 10, so he owes $ 10,000. He put a $ 1,000 deposit, the brokerage firm gave him an extra $ 9,000 to buy a hundred shares. The stock price rose to $ 10.50 per share, and he sold them all for $ 10500. He gave him $ 9,000 in debt, keeping $ 1,500 in the original $ 1,000 or 50% profit for $ 500. Very good eh? However, if he made the wrong decision, the stock fell to $ 9.50, he would lose $ 500, or 50% of his original $ 1,000 loss. As a result, margin trading can be very profitable because it allows you to have a huge exposure to the market and therefore greater profit potential. However, it also has a potentially greater loss. If you are interested in this, first do your homework and pay close attention to your brokers advise you!