Published On: Mon, Dec 18th, 2017

Important Stock Market Terms Which Every Potential Investor Should Know

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The stock market is growing in popularity with every passing year and is an easy way for many people to secure their financial future by investing properly. The thing is, to be successful, you need to know your stuff. This means getting clued up in all the essential terminology. From ‘bear market’ to ‘authorised shares’, ‘FOREX’ to ‘ETFs’, you’re likely scratching your head in confusion right now, but keep reading to learn more. Here’s the only list you’ll ever need to understand the basic terms out there.

Ask – When people are selling their stocks, they ask around to find what they want for their shares.

Authorised Shares – This refers to the total number of shares in which a company can trade. For example, a firm may only be authorised to issue 1,000,000 shares.

Bid – A bid is what you’re willing to pay for the particular stock in mind.

Broker – This is the person who buys or sells an investment for you but in exchange for a fee.

Bull Market/ Bear Market – These two terms refer to the way in which the stock market rises and falls. Bear Market is a way to describe the downfall of the stock market, where there is a period of falling prices. Bull Market is the opposite and refers to increasing stock prices. If you want to, visit this video to go into more detail about these terms.

Buy – This is when you buy shares in a company or take an authoritative financial position.

Dividend – Maybe one of the most talked about terms. This refers to a portion of the company’s earnings, which is then paid to shareholders. Not all companies do this.

ETFs – This stands for ‘exchange traded funds’ which are like stocks, but also like mutual funds.

FOREX – Means ‘foreign exchange’, this involves trading between different currencies.

Moving Average – This refers to a stock’s average price-per-share during a time period.

Portfolio – An investor’s collection of investments which gradually builds up over time.

Quote – This is the latest stock score of a specific company which can change regularly. They’re plenty of websites out there which give you accurate evaluations of stocks, for example, if you’re thinking of investing in the Netflix stock, be sure to know the rates first. It’s important to always have a quote before investing in a stock.

Sector – A way of categorising stocks into the same business. An example of this is the ‘Technology’ sector where companies like Microsoft and Apple belong.

Sell – Once you’ve achieved your financial goals, you sell shares to create a profit or to cut your losses.

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Stock Symbol – Also known as a ticker symbol, a stock symbol represents a publicly traded company on a stock exchange. This has one-three alphabetic characters, e.g. AWR (American States Water Company).

Volatility –  Refers to the price movements of a particular stock or the stock market in general.

Volume – This defines the number of shares of stock which is traded during a specific time period. Typically measured in a daily average.

Yield – When you make an investment, a yield refers to the amount of return which is received through the dividend. To determine this, divide the annual dividend amount by the price paid for the stock.



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