How to Uderstand Stock Market Terms
May 10, 2009 by Gilbert Stockton
Filed under Stock Market
Stock market terminology is often confusing and difficult to understand. This is especially true if you are a new investor. Even though these terms are difficult to understand it is in your best interest to learn these phrases to help you in making wise investment decisions.
One of the most commonly heard terms is about the stock market going ‘bearish’. This basically refers to a time when the market is beginning to slide and is likely to experience a fall. The opposite of this-when the market is doing well and is expected to keep rising-is called a ‘bullish’ market situation. A bullish market is supposed to be enthusiastic, with scope for quick profits, while a bearish market is considered cynical and racked by mutual suspicion. Simple as that! Now that you know the bulls and bears of the stock market, you should know what a ‘writer’ means in stock market jargon. A writer is not the genius artist of the Renaissance mode, but rather one who sells a stock option. Opposite to the writer is the one who buys the options, and he is called, quite simply, the ‘taker’. So, as you can see, it is not such a difficult task understanding stock market terms-a lot of it is just common sense.
Leverage refers to spending a small amount of money on an investment and getting a large return on your money. Buying stocks for margin means you can borrow money from a security or loan and then secure yourself from a fall in the value.
Stocks and shares pay out whats called a dividend. It is a portion of money they company earns paid out to its stockholders. This dividend can be used to purchase more stocks if you choose to roll it over.
Your bank account will benefit from the more knowledge you have about investing. The more market terminology you have the better you’ll be able to make a wise investment in that decision.
In no time you’ll be speaking the lingo if you pay attention to your market.
