In the following article Jargons Explained. While many would like to enter the stock market, it is fear that keeps many away. The stock markets are dangerous places and if investors are not careful, they would see an erosion of their wealth right under their eyes. While fear factor is major cause, that deters many wannabe investors, others are put off because they don’t understand the complicated terms used to denote various things in the market. Before anyone plans on making online stock market investments, it’s advisable to learn what terms are used commonly when dealing with stocks. Listed below are some of the terms that are used in stock markets.
Stock Broker: A Stock Broker is the individual through whom you place orders for buying or selling stocks of any company on your behalf. The stockbroker charges a small amount of commission or brokerage fee for each trade he executes on your behalf. The larger your investment the higher will be the brokerage fee. Internet has made I possible to do online trading through reputed stock broking companies at lower commissions instantly.
Stocks: The shares of a company are referred to as stocks. When you buy stocks of a company then you become an owner of the company and become a stockholder of the company. When you hold stocks, you are entitled to vote when shareholder meetings are convened. Depending on the number of stocks you hold, you are offered dividends. As owners, you are given many privileges and provided fist hand information about stock splits, bonus shares, mergers etc with regard to the company.
Dividends: These are payments made to share holders of the company in return for their valuable trust. These dividends are handed out to investors after every profitable quarter. Investors who make a tiny sum will re invest to buy more shares in the company.
Stock Splits: The individual stocks are split with value reduction. The common stock split is 2:1 where every share held splits into two, the overall value of the share remains the same while the price reduces.
Bull Market: When the stock market sees an upward move in its indices then it called a Bull market. All the indices remain in the green. When the market witnesses a Bull run, it denotes that the overall economy of the country is strong and there is stable growth. It’s during a Bull Run that many investors get confidence to make investments. This is when new investors also join in so they can make some money.
Bear Market: When the market indices see a downward slide then it refers to a Bear Market. This is the time when investors get nervous and start to dump their shares which further causes a downslide in the indices. Many people who are taken unawares make losses.
Day Trader: A Day Trader is an investor who invests in shares and sells them on the same day which is usually a single trading session. A day trader may buy shares at the beginning of trade and later dispose the same shares when they peak. It’s possible that the shares could see a down turn and the day trader could end up losing money too. Day Trading is tricky and risky.
Make a complete study and familiarize yourself with all the market terms before becoming an online invetsor.