Like any kind of profession, being a stockbroker has its own lingos and jargons. If you want to succeed in stockbroking, then you must know about common stockbroking terms. The last thing you want is a client asking you what a term means and you will look as if you are a deer caught in the headlights. It makes you look like you don’t know anything about your industry.
To help you with that, this article is going to enumerate the top 15 terms that you should know when it comes to stock broking with cmc markets.
- Bear Market – market direction can be in either up, down or sideways. If the market is going down (when the stocks and assets values are going down), then this is also known as Bear Market in the financial industry.
- Bull Market – remember we discussed the market could go up, down or sideways? Well, a bull market is the complete opposite of the bear market. This translates to stocks and assets going up.
- Blue Chip Stocks – in every industry, there are a couple of established companies that are big and stable. These are attractive to some investors because they usually offer dividends and they have the reputation of being safe. These kinds of companies are also known as the Blue Chips Stocks. The terms come from casinos, being the chip that is colored blue is often the highest denomination.
- Day Trading – a person can hold a stock for days, weeks or months. There is no surprise to that. However, there are professionals who open a position and close a position all in a single trading day. This is what is termed as day trading.
- Dividend – some mature companies offer back part of their profits to shareholders. The profits that are given back to the shareholders is what is known as dividends. Keep note that not all companies offer dividends.
- Exchange – when traders and investors buy and sell stocks and other assets, they do it in a “market”. In this context, the market is what is known as Exchange. An example of an exchange is the New York Stock Exchange and NASDAQ.
- Hedge – nobody knows the future and the market could go against you. This is the reason why some professionals use mediums to limit their losses such as stop losses or using future options. The idea of limiting losses in the stock market is known as Hedge or Hedging.
- Execution – in the stock market, you place an order either to buy or sell. Once another party has agreed to buy or sell (depending what you want) and proceeds with the transaction, then this what is knon as execution.
- Index – the stock market has its own benchmark that investors and traders often compare their results. The benchmark they compare to is the commonly the index. Index is basically a collection of the biggest and leading companies within a sector or group. An example of an index is Dow Jones Industrial.
- Initial Public Offering – stocks are actively sold every day, day in and day out. Yet, it has to start somewhere. Hence, the first time a company that sells its stock publicly is what is known as Initial Public Offering, or commonly known as IPO.
- Margin – you can loan to buy a car or house, right? Well, you can also loan from your a stockbroker to buy more stocks. The difference between the money you loaned and the value of the stock is known as the Margin.
- Portfolio – when someone uses the term Portfolio in the financial industry, this means that he or she is referring to the collection of stocks and other securities that he or she owns.
- Quote – so you own the stock, and you want to know what the latest trading price of your stock. Then you are asking for the Quote from your broker.
- Spread – selling and buying stocks is like negotiating. Some are asking for their buying price and some are offering their selling price. The difference between the two is known as the spread.
- Volatility – some stocks are stable thus their price movements do not swing so much. Some are the opposites, and can widely swing. The intensity of the swing is termed as volatility. Thus, if it swings so much, the stock is termed as highly volatile.
So there you go, these are the 15 common terms that are often used in the stockbroking industry. Learn them by heart just like any other good stock broker. Also, these are only a few of the many common terms in the stockbroking industry. So don’t stop exploring and learning new jargons.