Johannesburg, 1 February 2023: In an era of high interest rates and worldwide cost of living increases, stock trading and forex trading in various forms have become one of the few ways to maintain and potentially grow wealth. For many, however, the language of trading is incomprehensible and makes understanding it challenging. CMTrading shares 20 words and phrases to help you navigate the trading world.
Annual Report
An Annual report is an in-depth document designed to inform shareholders of a company’s financial situation and its ongoing management strategy. Reading these reports can give significant trading signals and insight into a company’s potential growth or decline.
Arbitrage
Arbitrage is the act of simultaneously buying and selling one type of commodity (same type of underlying asset) in two separate markets. Advantages are gained when this commodity is offered at different prices in the two markets and can be bought low in one and sold for more in the other.
Bear Market/Feeling Bearish
A bear market is one in decline where major index or stocks are falling. To feel bearish is to feel pessimistic about the market. It represents the way a bear engages in a fight by lowering his ‘head’ when he strikes.
Bid
A bid is the amount of money (highest price) a trader is willing to pay per share. This is compared with the “ask” which is (the lowest price the seller is looking to sell) what the seller wants to achieve for a share of that same stock.
Blue-Chip Stocks
Blue-chip stocks are those for large industry-leading and often global companies.
Broker
The broker is the intermediary who facilitates a trader buy and sell shares on an exchange.
Bull Market/Feeling Bullish
A bull market is the opposite of a bear market and is one where the major indexes or stocks are trending upward. To feel bullish is therefore to feel positive. It represents the way a bull strikes, goring with its horns upwards.
Dividend
A dividend is a portion of a company’s earnings paid to shareholders quarterly or annually. Not all companies pay dividends, but they can form an important aspect in deciding whether to buy or sell a share.
High/Low/Moving Average
In stock trading, a high is the greater price point for a stock. Stocks can reach a daily, weekly, monthly or 52-week high indicating their prices are the highest they have been in that time frame. A low is the opposite, the low point for a share over the same period. The moving average is the stock’s average price over a period.
IPO – Initial Public Offering
An IPO is when a company offers its stocks to the public for the first time.
Leverage
Leverage is the amount that a trader can borrow on account with their broker, it’s a good faith deposit made by the trader that gives leverage to control a larger amount of money to be used for trading purposes
Portfolio
A trader’s portfolio is a complete list of the assets and stocks that make up their position, whether it be one stock or thousands.
Quote
A quote is a stock’s current trading price.
Rally
When a share rallies, it is seen to be trending quickly upward in price over a short period of time.
Sector
A group of shares from the same industry is regarded as part of the same sector. There is some correlation between these companies as they share market conditions and concerns, and as such, Sectors often trend together in price at any given period. Sectors include the retail, financial and tech sectors.
Spread
The spread is the difference between the ask and the bid price.
Stock Symbol
Traders refer to companies by their stock symbols, which is an assigned series of between 1 and 4 letters that indicate that company in all communications. For instance, Microsoft is MSFT.
Volatility
This indicates the price movement of either a single stock or the market as a whole. A market with large swings in price is said to be volatile.
Volume
This is the number of shares traded in a day.
Yield
The measure of return on an investment. How much will you earn from the investment in that stock?
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CMTrading is the brand name of Global Capital Markets Trading Ltd (A Seychelles company, company no. 104785)
