A buyer of an initial futures contract is said to have a long position and, conversely, a seller of an initial futures contract is said to have a short position. A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price. Institutional investors are inclined to seek out liquid investments so that their trading 40 stock market terms activity will not influence the market price. An individual or company owning or planning to own a cash commodity corn, soybeans, wheat, U.S. Treasury bonds, notes, bills, etc. and concerned that the cost of the commodity may change before either buying or selling it in the cash market.
It’s also crucial to be aware of specific rules and regulations that govern this high-paced trading style. These rules are not just bureaucratic red tape; they are designed to protect traders from significant losses and maintain market integrity. For instance, the Pattern Day Trader rule requires traders to maintain a minimum account balance, which is essential for managing the inherent risks of day trading.
Contributions – Limit Increase
A mutual fund an investment vehicle whereby funds are pooled together with the goal of investing into securities like stocks and bonds among others. The OTC market allows for the trading of assets without the formal structure of an official exchange and is considered a risky area to invest. ETFs are similar to mutual funds — they’re pools of capital used for investment purposes.
Beginner’s Guide to Key Stock Market Terms
Alpha is the first letter of the Greek alphabet and it is used to represent the relative returns of a Mutual Fund or stock when compared to the overall market or the benchmark. For example, when an investor invests in a NIFTY 50 Index Fund, a passive strategy of investment is being used. The Federal Reserve (Fed) is the central banking system of the U.S. It influences economic activity by adjusting interest rates—higher rates slow borrowing and spending, while lower rates encourage economic growth. GDP is the total value of goods and services produced within a country.
Evaluate your risk tolerance
By familiarizing yourself with these key concepts, you can approach the world of finance with increased confidence and insight. Remember, continuous learning and staying updated on financial terminology is important in an ever-changing market environment. A form executed by the high bidder confirming and acknowledging the bidder’s identify, the bid price and the description of the property. NewslettersStay informed on the most important real estate business news and business specialty updates.
Dividend Yield
Companies like Coca-Cola, Berkshire Hathaway, and Johnson & Johnson are examples of blue-chip stocks that are often considered reliable investments. Defensive stocks are commonly considered to be stocks that are less volatile as compared to the overall stock market. Many investors consider stocks of some key industries such as healthcare, utilities, and fast-moving consumer goods (FMCG) as defensive stocks. In contrast to a bull market, a bear market represents a period of prolonged and consistent fall in stock prices. Usually, a 20% fall in stock prices compared to previous levels is considered a bear market.
If your company uses immediate vesting, you get to keep everything they give you right away. Stocks can be classified based on different criteria, each offering insights into their characteristics and behaviour. A single stock may belong to multiple categories depending on the method used for classification. Two styles of factor-based investing that have become popular in recent years are low volatility investing and momentum investing. Even though they are the 11th and 19th largest listed companies in India, respectively. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability.
- Experts in every industry use unique terms and phrases that might not be easy for the everyday person to understand.
- Fear not, because the folks at Visual Capitalist have broken it down the best way the know how – cool imagery.
- If you quit after 1 year but before 2, your vested balance is about 33% of your employer’s contributions.
- This refers to the size of a company’s dividend compared with the price of its stock.
- So, the expected returns of the stock or sector will be in line with the average returns of the benchmark or index.
- We have published 3000+ free articles for the benefit of webmasters and tech community.
After Learning The Most Common Stock Market Terms, Whats Next?
- Understanding ‘Day Trading Terms’ is essential for strategy execution.
- Apart from low volatility and momentum, investors can also use other factors such as value, size, quality, etc., to come up with other factor-based investment strategies.
- It is important that you understand that with investments, your capital is at risk.
- Fidelity does not assume any duty to update any of the information.
- If you plan to invest for decades, you might be able to afford the short-term volatility of riskier stocks like IPO or cyclical stocks.
- For a detailed guide on day trading rules, explore StocksToTrade’s comprehensive overview of day trading rules.
Stock options give you the right to buy shares of your employer’s stock at a set price, even if the market price is higher. Stock Appreciation Rights (SARs) work in a similar way, letting you lock in any gains that may have been in the stock price. Your investment horizon can help determine the right types of stocks for you. If you plan to invest for decades, you might be able to afford the short-term volatility of riskier stocks like IPO or cyclical stocks. Conversely, large-cap or dividend-paying stocks might be a safer choice if you’re nearing retirement or need liquidity sooner. Understanding how much risk you’re willing to take is another crucial factor when selecting stocks.
To qualify as a defensive stock, the beta of the stock must be significantly lower than one. Since beta is a measure of the stock’s volatility, a lower beta signifies lower volatility. In this blog, we will discuss what 22 standard investment terms mean so that they are easier to understand for the average investor. In this podcast we help guide you to think about your money in a practical sense and make the boring and complex financial decisions, fun, informative and educational.
Similarly, the bear’s period is there when the stock market is falling and going red. This includes institutional investors but is also available to individual investors. Cash Flow – Cash flow is a measurement of how much cash and cash equivalents a company is receiving and how much it is sending out. Loan Officer – a representative of a bank or broker who originates mortgages on their behalf. Lien – a claim against a property by the issuing bank or lender to secure repayment of a debt, typically in the form or a mortgage. Jumbo Loan – a loan amount above the conforming loan limits, which is set each year by Fannie Mae and Freddie Mac.
If you choose to exercise your stock options though, you would owe taxes on the difference between the stock’s fair market value and the grant price. It is important that you understand that with investments, your capital is at risk. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us.
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Bull markets are characterized by optimism and excitement from traders and investors. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely.
Preferred stocks, by contrast, generally do not offer voting rights but provide more stability. Preferred shareholders receive fixed dividend payments before common shareholders and have priority in asset claims if the company goes bankrupt. This makes preferred stocks appealing to investors seeking more predictable returns with lower risk.