Share Trading Terminology
There are quite a lot of Share Trading Terminology when trading the Stock and Share market. Here are a some of them you can find out more at one of our Share Trading Courses.
This list is by no means a definitive list of Stock Trading Terminology. But each stock trading term has a definite meaning. All professional stock traders use stock market terminology.
Get yourself familiar with these share trading terminology. So you know how to use them.
A bear is a trader who expects that the market will fall. He will be selling Short. Selling shares that he does not even own hoping he can buy them back at a lower price and make a profit. Always be careful when shorting as Bears can be caught Short.
Big Bang in the City of London was on 27th October 1986. In simple terms, this was about the deregulation of the UK Stock Exchange. This heralded the introduction of screen trading as opposed to the old Stock Broker, Stock Jobber system. It also allowed for outside ownership of Stock Brokers which allowed the City of London to grow as an International Financial Centre.
Before the days of Big Bang share buying and selling was carried out by a Stock Broker, a Stock-Jobber and a Blue Button. The Blue Button was the messenger boy in the market system. The name comes from the small blue button badge worn in the Lapel.
Blue Chips are shares that are considered to be long-term holdings irrespective of market conditions. They usually are good and consistent dividend payers. In the UK you can find these in the FTSE 100 and specific examples would be Royal Dutch Shell, BP, Vodafone, HSBC, Glaxo Smith Kline and Rio Tinto Group taking the top six based on market cap from the FTSE 100.
A bull is a trader who believes that shares will rise. He will be buying long positions in the hope that they will rise in a Bull rally. When prices do rise Bulls charge and the market can move upwards very quickly.
Buy Low Sell High
I suppose this is every body’s idea of success.
Buy Low Sell High
These record the actual history of the share price. They can be very revealing and informative. Providing guidance as to trends and possible buying and selling signals
Be very wary of cold callers. These are usally scammers and to be avoided at all costs. it is illegal in the UK for investment firms to make cold calls trying to sell shares. Sadly this does not apply to binary options. Remember if it sounds to be good to be true you know its a scam. Steer well clear, Also suggest you only deal with firms that are regulated in the U.K.
Great advice always – Do your own research
MACD indicator is an abbreviation of Moving Average Convergence Divergence indicator. It is a technical indicator created by Gerald Appel in the late 1970s.
Market Cap is simply the number of shares in issue multiplied by the market prices of these shares.
Momentum Trading is a method of stock trading, where in a trade is made, when the stock is making a trending movement.
A unit ownership proportional to the investment made in a company.
A Spread Bet in the financial sense is a way if trading on a share, idex or a commodity. For example, you cam spread bet on Gold, Oil, Shares and Indices such as the FTSE100.
The Spread on a Stock or a Index in Spread Betting, The FTSE Index has a spread of 2 points. So if your bought and the price hadnt changed you would be down £2 at £1 a point. The spread is how the index maker earns his keep.
A financial instrument that signifies an ownership of a company, and represents a claim on its proportional share in the company’s assets and profits.
Stop Loss Order
A stop loss is used to contain a traders loss on a position when trading a share or security.
A stop can be used for a Long or Short position. So if buying long and the price falls below your stop loss your security will be sold resulting in a loss but a controlled loss rather than an unlimited loss.
For a short trade the security would be purchased if it trades above your stop level.
The use of a stop loss can be very useful and if properly set and reviewed as the trade moves it can build in profit if the market moves against you.
A big word of caution a normal Stop Loss is not guaranteed. For example when the market reopens in the morning the stock could trade substantially below the stop in the case of a Short or fall subst
antially if your position is long. Quite often recovering in the next 30 Minutes.
When a share continues to rise it gets called a trending share as it is following a rising trend. Likewise if a share continues to fall it is following a falling trend. The same applys to Index Trading.
The return by way of dividend on a share.
Our Beginners Share Trading courses are for educational purposes only we do not provide investment advice.
You must always remember that trading in stocks, shares and commodities has a considerable inherent risk. The market can and does change due to circumstances beyond your control.
To find out more information about Investing and Stock and Share Trading go to our resource centre at Share Trading Course