No one ever said trading was easy, and it certainly isn’t. However, with a little knowledge and a bit of practice, you can start trading like a pro. Here are some of the most important terms to know when starting out in the world of trading.
An asset is anything that has value and can be traded. These can be stocks, commodities, currencies and securities.
A bond is a type of security that represents borrowing money from an investor. The bond issuer agrees to make regular payments over time to the bondholder until it matures or is repaid.
A Future (or futures contract)
A forward contract is an agreement between two entities to buy or sell an asset at a fixed price on a fixed date in the future. Futures contracts are often used for commodities like oil or gold, but they can be used for any type of asset.
Margin is the amount of money you must post as collateral in order to enter into a futures contract. It is basically your insurance policy against losing money on the transaction.
A doji candlestick
A doji candlestick is a Japanese candlestick chart pattern that signals market indecision. It forms when the open and close are within a narrow range, indicating that the market could not make up its mind on which direction to go. Doji candlesticks can be bullish or bearish, depending on the prior trend.
A stop-loss order
A stop-loss order is an order placed with your broker to sell your position if it reaches a certain price level. This protects you against sudden price drops and prevents you from losing too much money on a particular trade.
A bull market
The term “bull market” is most often used to refer to the stock market, but it can be used for other investments, such as bonds, real estate, and commodities. In a bull market, investors generally expect prices to continue to rise, although there may be periodic dips along the way.
A bear market
A bear market is a period of falling prices for stocks and other securities. The term “bearish” comes from the fact that the price of a stock or security in a bear market generally declines. The fashionable expression to qualify it is “Bear Market”. You must have heard it before, right?
An initial public offering (IPO) is the first time a company offers its shares to the public. When a company goes public, it sells shares of its company to investors and obtains funds that it can use to expand its business, hire new employees or develop new products.
A broker (or broker)
A stockbroker is an intermediary between a trader and the financial markets. A trader can be anyone, from a retail investor like yourself to a large institution. Stock brokers provide access to financial markets by acting as an intermediary between buyers and sellers. They offer traders access to a range of products including stocks, options, futures and Forex currencies.
So now you know the ten most important terms to start your trading adventure. Of course, we advise you to inquire further. It is important to educate yourself as much as possible before investing your money.