Stock Market Terminology - a Few Guidelines

While the stock market offers countless possibilities to people to make good use of their capital, novice in strock market trades might find it difficult at first to fully comprehend its terminology and be able to come up with the appropriate tactic when negociating their offers.

If this is the case, then you should make sure you feel at ease with the specific terms regarding stock market and not let your apparent lack of experience prove detrimental for business. A few guidelines for beginners will be presented below.

Stocks

Stocks represent the common 'currency' in a stock market. Literally, they represent shares in different companies, than can be used to trade, either to be bought or to be sold in the public market.

When stocks belonging to a company are bought, the buyer then acquires ownerships rights, since a fraction of the company's stocks are in his possession. The buyer can later invest his stock. If he acquires a significant fraction of the company's stock, then his rights as a stockholder extend, in that he can now attend stockholder meetings to cast votes regarding the company's decisions and he can also receive a part of the company's earnings due to his increased status as a stockholder.

Broker

A broker is the person employed to deal with stock trading. It is he or she that negociates prices when selling or buying stock, in the name of investors and companies involved. Various types of broker exist such as an online, discount auto-trade or full-service broker.

Bull Market

Bull markets represent the type of markets where the value of stocks increases on a continuous basis and exhibits a continuos growth. In such a profitable market, investors gain reassurance and buy stock more easily rather than simply selling it.

Bear Market

A bear market represents  the opposite of a bull market in that investors may experience losses or declines in their profits when stock trading. In such a discouraging market, investors are more wary regarding their stocks and choose to sell more rather that exposing themselves to the risks of buying of stock.

Dividends

Dividends represent bonuses or surplus payments that stockholders can earn, even after gathering their profits. The amount of money coming from dividends is frequently used to invest again in other  stocks, stocks which can then produce other profits and dividends, thus helping the investor to increase his profits.

Futures

Similar to stocks, futures are used for trading in the market. Because prices in the future might fluctuate, futures are acquired to protect investors from commodity prices. They can bring profits if the price of commodities becomes higher than what the investor originally paid for. On the opposite level, investors will lose if the price of commodities is lower that what was originally paid for futures.

Day Trader

Day traders are investors that use an angressive method of dealing with stock, that is buying and selling stock immediately after the process in just one day. To ensure profits are earned, day traders repeat this method several times a day to gather small profits out of their transactions.

Trading on Margin

The trading on margin technique ressembles stock trading, with then noted differences that investors use borrowed money. One can purchase stock shares  by giving only a small amount of money of the original price. After the sale of that particular stock, the remaining amount of money is paid, based on a previous agreement.

The outlined terms above constitute only a small part of stock trading terminology, but can be used to make a rough idea of what you will be dealing with, if you decide to enter this market. While the stock market may seem initially intimidating and it can be difficult to tackle with such advanced terminology and learn all the techniques a succesful investor would need, potential participants in this field should not feel discouraged.

All novices in the area need some time to accommodate themselves with the markets and learn its ropes. The strategies that one will need in order to obtain profit will be acquired with the passing of the time, provided that hard work and determination are your keys to accomplishing your goals.