Understanding Stock Market Terms

The kind of jargon that is used by the stock market professional is often incomprehensible and very daunting to the newcomer in the field. But if you are getting into stock trading, it would a good time for you to start learning so that you don’t get left behind. Understanding stock market terms is very important if you are to succeed at trading, but thankfully, it is not a very difficult task.

One of the most commonly heard terms is about the stock market going ‘bearish’. This basically refers to a time when the market is beginning to slide and is likely to experience a fall. The opposite of this-when the market is doing well and is expected to keep rising-is called a ‘bullish’ market situation. A bullish market is supposed to be enthusiastic, with scope for quick profits, while a bearish market is considered cynical and racked by mutual suspicion. Simple as that! Now that you know the bulls and bears of the stock market, you should know what a ‘writer’ means in stock market jargon. A writer is not the genius artist of the Renaissance mode, but rather one who sells a stock option. Opposite to the writer is the one who buys the options, and he is called, quite simply, the ‘taker’. So, as you can see, it is not such a difficult task understanding stock market terms-a lot of it is just common sense.

Another terms that often comes up in stock market terminology is ‘leverage’. What ‘leverage’ means is basically the ability of a stock to make a large profit by putting in a small sum of money. This is an important term in knowing whether you stock is doing well or not. Another terminology you need to be familiar with is what is called a margin loan. A margin loan allows you to borrow funds so that you can buy more shares. These stocks then form your security and loan ratio. In the margin call, the borrower can ask for extra funds as security in case of a fall in the value of his stocks.

Stocks and shares are what companies put on the market for you to buy. On these stocks, the company gives you a dividend twice a year. Many people also choose to reinvest their dividends in stocks so that it can generate its own money at a pace faster than in the bank.

Stock market terms are multiplying with every passing day and you need to learn something new everyday to stay up to date on new developments. A knowledge of these terms and how they work is essential to succeeding on the stock market. You take some time understanding stock market terms, or you may end up making big mistakes and losing big money. So, in-depth knowledge is an integral part of investing wisely, making gains and getting rich. The rest won’t happen unless you know your way around the market. So, take your time and inform yourself and before long, you will see the dividends of your efforts show up in your bank account