When entering stock market trading for the first time, there are many things you need to understand. You will be working and mingling with other traders so you need to know the language they are speaking. There are many jargons that are used in the stock market and not knowing them may make trading overwhelming and confusing for you. Here now are some stock market jargon you need to understand.
Market here does not refer to a place where we buy fruits, meat, and vegetables. It does not talk about the more than 6.000 stocks on the exchange. Market refers to the 500 biggest names used for trading on the stock market. This list is known as the S&P 500. A list of stocks is called an index.
Points refers to the price of an index. One unit is equivalent to a point. So if the S&P 500 is at 1,200 points in the S&P 500, this means that it is at 1,200 points. When the points go up say by 100 points, traders will say “the market is up 100 points today.”
Bulls and Bears
When we say the stock market is bullish, it means that investors are confident with it. On the other hand, bear market refers to the opposite scenario in stock market trading where investors fear that the price of the stock market will drop.
Crash or Rally
When the market is crashing, it means that people are selling off their stocks. They are doing this quickly because of fear of a bear market. Since everyone is selling off their stocks quickly, the price of the market crashes. Conversely, when people start buying stocks again quickly, the price goes up again and is also known as rallying.
Market timing is a trading strategy wherein traders buy and sell stocks by predicting what their future price will be. A common strategy in stock market trading is buy low, sell high which means that the trader will buy when the market is at its lowest and sell when at its highest.
Tick here does not refer to the small insect found in a dog or cat. It represents the movement in the price of a stock. It is called as such because in the old days, market data came out from a “ticker” machine which punches holes in paper representing the price. The machine made a “ticking” noise.
If want to become successful in the field of stock market, you first need to understand these jargons so you would not get confused.
Robert Peter Janitzek provides tips and guides on become successful as a stock market trader. Check out his blog at www.robertjanitzektrading.com.