When you have decided to invest your money in trading of shares/stocks, bonds, cryptocurrencies, derivatives, etc., the first action that you need to initiate before trading is to learn the basic trading terminologies. Although we have trading software such as Ethereum Code Ltd, CryptoTrader, Trading View, MetaStock, and many more that is built with high-end applications and advanced software to assists the investors on the trading platform.
There are possibilities where the prediction of the trading software may go wrong. It is always better you examine the suggestions provided by the trading software before making any investment decision. To do the same, you must understand the fundamental trading terminology and its workings.
Below are the common trading terminology used in the financial market.
Day Trading: Refers to buying of shares/stock and other financial instruments and selling the same within the same day.
Swing Trading: This is contrary to day trading. The shares are bought, held overnight and sold when the prices are favorable. The shares are not held for a long time. This is a short-term investment.
Exchange: A Physical/online platform where the investments are being bought and sold.
Stock Market Hours: Refers to the working hours of Stock Exchanges which is generally 9.30 am to 4.00 pm excluding the weekends. However, one can still trade pre and post market hours, but the liquidity factor will be deficient as there is a limited number of buyers and sellers.
Bull Market: Type of market situation where the prices of securities go up. This can be used to reference the position of a trader, i.e. if they are bullish; it means the prices of securities are tending to rise.
Bear Market: In contrary to the bull market, a bear market situation refers to a weak market where the performances of securities are poor.
IPO: Refers to Initial Public Offers, where the company sells a fixed number of shares in an open market to raise funds for the first time.
Float: Refers to the number of outstanding securities available for trading. A Float is nothing but the supply of securities. Securities that are limited and are high in demand are sold faster than the other securities.
Beta: Refers to the numeric value to measure the fluctuation of securities based on the market movement.
Execution: Situation where an order for buy and/or sell has been completed.
Ask Price: Refers to the price the seller is willing to sell the securities, which eventually becomes the cost for the buyer
Bid Price: Refers to the price the buyer is willing to buy the securities in the market.
Index: This is a benchmark term which is used as a reference marker for traders and portfolio managers.
In addition to the above, terms such as broker, dividend, hedge, margin, are commonly used in the trading platform. The investors will eventually learn these terminologies once he/she begins to trade frequently in the market.