Entering the stock market scene should not feel as complicated as taking aerospace or quantum physics classes. Behind those terms are common descriptions for stock prices and trading strategies. This stock market terminology guide simplifies those terms to help you understand MMT guides and trading shares.
To start, we recommend bookmarking this post. If you come across a specific word involving the stock market or with general trading, the stock market terminology list describes those terms. Even seasoned traders can use this term dictionary if they come across anything unfamiliar.
Alpha (α) is a measure of your investment strategy’s capabilities in beating the market. The returns are used as your measurement. A positive alpha shows a large ROI, while a negative alpha indicates a lack of returns.
An adjusted beta is an estimate of a security’s future beta. The data used for the estimation is the security’s historical beta score.
One option contract type is the American option, which allows you to exercise or close the contract before the expiration date.
An analyst rating is a scale based on an expert’s recommendation in buying, holding, or selling a stock. One of the recommended analysts who are often quoted by outlets like CNBC is Ebrahim Poonawala.
Public companies are required to publish an annual report to show their financial status and current business performance. Publishing a yearly report is a regulatory requirement after the 1929 stock market crash. Traders anticipate an annual report since it can affect the public company’s stock price.
Arbitrage occurs when traders buy stocks in one market and sell them in another. The aim is to sell that asset at a higher price in an alternative market. One example is a trader buying Apple stock on the New York Stock Exchange and selling it to the London Stock Exchange.
This is the selling price a trader wants for a share. It is also the lowest price a platform is willing to sell an asset.
In trading, assets are liquid items (things you can easily convert to cash) like currencies, commodities, and cryptocurrencies. Stock market assets consist of shares of publicly traded companies. These are also split into classes such as stocks, bonds, cash, and real estate.