Most Common Terms Used in Stock Exchange

Stock trading is when an investor buys or sells company shares thru an organized trading platform or a stock exchange. Most of the time, the real value of the business is determined on the stock exchange quotation. Other than that, it can also be determined through online trading, which is made accessible using specific software. It is also very important to choose a trading platform that supports stock trading like MetaTrader 5.

Common Terms Used in Stock Exchange

American Depository Receipt (ADR) – it is a certificate that states that US citizens can own foreign stocks.

All or None (AON) – it is an additional condition set for limit orders, which indicates consent to full order execution (not partial).

Average Price – is the average price of a stock in an open position.

Averaging down – it is the addition of a particular amount of asset at a much higher price against a losing position so as to improve the price of the stocks.

Ask Price or Ask – it is the stock selling offer.

Bear – it is the name of the trader who is waiting for the price of his asset to go down.

Bear Market – a downward trend market.

Beta – it is an indicator that detects stock price volatility based on other assets. It is also the measure of the market risk

Bid Price or Bid – it is a stock buying offer.

Contract for Difference (CFD) – it is the security trading without the need to own the underlying asset.

Commodities – they are physical goods such as cocoa, sugar, gas, oil, and gold.

Currencies (FOREX) – it is mostly used when dealing with the Forex market, it is the act of bidding on the fluctuations of the exchange rate.

Cryptocurrencies – it is the digital asset that is being used in virtual activities as virtual currency. It is not regulated by the central banking systems.

Derivatives – it is a financial security that represents the right as well as the obligation in buying or selling the asset at a particular condition or price.

Fractional Share – it is the portion of a company stock that is less than a single share.

Hedging –is a method of risk reduction that is used as a derivative.

High – it is the highest price at a particular period.

Indices – it is the investment fund that can be traded such as stocks.

Individual Retirement Account (IRA) – it is a stock trading account that is managed personally.

Individual Savings Account (ISA) – it is a tax-free investment that involves personal costs in deposits, funds, and shares.

Leverage – it is the ratio of the assets you own and the loaned assets.

Long Position/Long – this is a long-term investment expecting that the price of the stocks will increase.

Low – it is the lowest price at a particular period.

Margin Account – this term is used when a trader borrows money from the broker under a particular interest rate.

Options – it is granting a right to the contracts and not an obligation to sell or buy an asset at a particular period and price.

Overnight Fees – it is a fee that is being changed when you hold a position open overnight.

Scalping –is a trading strategy wherein the trader profits from a small increase in price.

Short Position/Short – it is a term used when traders are expecting that the price will drop.

Understanding the terms mostly used in stock trading allows the trader to improve his trading. When it comes to a reputable trading platform, MetaTrader 5 is the best option for beginners and experienced traders.