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Simple guide to stock market jargon

For novice investors, the stock market might seem like an exciting but scary place. This simple guide to the stock market should outline some of the jargon that you commonly hear on the trading floors and on online trading platforms.

52 week range: the spread between the stock’s highest and lowest value over one year

AON: all or none

Bear: a trader or investor who sells stocks at a higher price then purchases it back at a lower rate

Bear market: the price of commodities have been falling for a prolonged periods

Blue chip stock: a valuable stock with a proven track record

Bottom fishing: purchasing stock that has experienced decline

Broker: agent in financial transactions

Broker loan rate: see call money rate

Bull: investors or traders who buy shares in the expectation that the market value of the company’s share will increase

Bull market: when the market is rising and there are more buyers than sellers

Call money rate: interest rates that banks charge brokers to finance margin loans. The broker will charge the investor the call money rate and a service charge

Circuit breaker: When the price of a stock increases or decreases by a specific percentage on a specific day, it hits the circuit breaker. Trading in that stock is not allowed for the rest of the day

Closing price: the last trading price for a security at the end of the stock market day

Correction: When the market indices rise rapidly for a few days and then retrace these gains

Day order: order to buy or sell at a price that expires if not executed on the day it is placed

Day trading: Buying and selling a security on the same day

Diluted shares: sum of the company’s normally outstanding shares, shares that would be outstanding if every warrant and stock option were exercised, and shares that would be outstanding if every security convertible into stock were converted

DNR: do not reduce

Downtick: the next trade is at a lower price than the previous trade

Elves index: Louis Rukeyser’s index of opinions in the stock market for the next 6 months

Executing trades: the moment you buy or sell

FOK: fill or kill

Going long: buying and holding stock

Going short: selling short stock

GTC: good till cancelled

Hedge funds: a fund that is able to use aggressive strategies that are unavailable to mutual funds

Investing: when you buy shares and hold them for a long time

IPO (initial public offering): when a company issues stock to the public for the first time

Limit order: an order to buy or sell when a predetermined price is reached

Market cap: see market capitalisation

Market capitalisation: total amount of stock the company has sold

MIT: market if touched

MKT: at the market

Plc: public limited corporation

Risk tolerance: an investor’s ability to handle the decline in value of his/her portfolio

Share: one unit of a company’s stock

Stock market: a place for trading company stocks at an agreed price

Stop loss: strategy to ensure trader will not incur a huge loss

Tender: to offer for delivery

Trading: when you buy a stock and hold it for a short time

Treasury shares: shares taken from the company treasury

Underwriting: When an investment banker brings a company to market in an IPO

Uptick: the next trade is at a higher price than the previous trade

Volume: the number of shares, bonds or contracts traded during a given period

Winning trade: one that makes you money

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