subject: So You Have Realised That Stock Market Trading Is For You; Now It Is Time To Understand The Phrases [print this page] People begin trading on the stock market for various different reasons. It may be their occupation and they act as traders for some of the biggest financial companies in the world, physically trading in one of the several stock market centres or they may simply be looking for a way to make their personal savings earn more.
If you fall into the latter category, have researched the stock market and believe that this could be the way to go for you, it is strongly recommended to sign up to some form of stock market training course. There are copious amounts of courses available to utilize, from those online that are entirely free, allowing you to learn at your own pace and with no financial outlay, to offline workshops that are attended on a regular basis that allow you to learn, in person, with other likeminded individuals from an experienced trader.
Whichever stock market training option you decide to go for, it is advised that you brush up on your stock market terminology before you begin. Whilst the phrases will no doubt be explained to you along the way, learning some of the most popular ones beforehand will make the entire process a whole a lot easier.
1. Bull and bear markets. Possibly the most popular phrase related to the stock market, by saying that a market is a bull or a bear one reflects on whether it is rising or falling. A bull market, for instance, shows that confidence amongst investors is high as investing is increasing. A bear market is the opposite and shows a lack of confidence, most popularly after the infamous Wall Street Crash in 1929.
2. Bid and offer. Working with a stock market broker, when you ask them the share price of a certain company, you will be quoted bid and offer prices. The first, the bid price, is how much you can sell shares for and the second, the offer, is the price of how much the shares would cost you to buy.
You may also hear another phrase here, called the spread, which is the difference between the bid and the offer prices.
3. Long and short. Related to the portfolio of a trader, a trader that explains they are long a stock means that they have purchased it with the intention of making money from it when its price increases. Conversely, short a stock means that trader is planning on capitalizing on it when it falls in price (which itself is something that many beginners to the stock market find difficult to understand).
4. Points. A term with multiple uses, the most common two refer to the increasing or decreasing price of a stock and the increasing or decreasing of an interest rate. In the first example, a stock that was to drop by 10 points would decrease by 10 pounds. For the second use, if a rate was to increase by 100 points, it would mean that the rate had gone up by 1 percent.
