15 financial terms you should know in the stock market

  1. ANNUAL REPORT: An annual report is a report prepared by a company that’s intended to impress shareholders. It has a lot of information about the company, from its cash flow to its management strategy.
  2. BEARISH: this is a trading expression for when the stock market is going down, or a period of falling stock prices. This is the opposite of a bull market. If a stock price falls, it’s very bearish.
  3. BID: The bid is the amount of money a trader is willing to pay per share for a given stock. It’s balanced against the ask price, which is what a seller wants per share of that same stock, and the spread is the difference between those two prices.
  4. BOURSE: This is just another name for the stock market and it originated from a house in which wealthy men gathered to trade shares. However, when you hear it in today’s conversations about the stock market.
  5. BROKER: A person who buys or sells an investment for you in exchange for a fee (a commission).
  6. BULLISH: When the stock market as a whole is in a really long period of increasing stock prices. It’s the opposite of a bear market. A single stock can be bullish or bearish too, as can a sector, which I’ll describe later on.
  7. DIVIDEND: A portion of a company’s earnings that is paid to shareholders, or people that own that company’s stock, on a quarterly or annual basis. Not all companies pay dividends.
  8. INITIAL PUBLIC OFFER (IPO): An IPO is the first sale or offering of a stock by a company to the public. It happens when a company decides to go public rather than remain solely owned by private or inside investors. The Securities Exchange Commission (SEC) has strict rules that companies must follow before issuing an IPO.
  9. PORTFOLIO: A collection of investments owned by an investor makes up his or her portfolio. You can have as few as one stock in a portfolio, but you can also own an infinite amount of stocks or other securities.
  10. SECTOR: A group of stocks that are in the same industry belong to the same sector. An example would be the Consumer Goods sector, which includes companies like Nigerian Breweries and Nestle. Some traders prefer to trade in a specific sector, for instance, energy, because they know the industry well and can better predict stock price fluctuations.
  11. SHARE MARKET: Any market in which shares of a particular company are bought and sold. The stock market is an example — and probably the most significant example — of a share market.
  12. SHORT SELLING: When you short-sell a stock, you borrow shares from someone else with the promise to return them at some point down the road. You then sell the stock for a profit. It’s a way to take advantage of a stock that you believe will decrease in price. After you sell short, you can buy back the shares at the lower price point and take the difference in price as your profit.
  13. TRADED VOLUME: The number of shares of stock traded during a particular time period, normally measured in average daily trading volume. Volume can also mean the number of shares you purchase of a given stock. For instance, buying 2,000 shares of a company is a higher-volume purchase than buying 20 shares.
  14. VOLATILITY: The price movements of a stock or the stock market as a whole. Highly volatile stocks are those with extreme daily up and down movements and wide intraday trading ranges. This is often common with stocks that are thinly traded or have low trading volumes.
  15. YIELD: Any market in which shares of a particular company are bought and sold. The stock market is an example — and probably the most significant example — of a share market.



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