The world of trading has various words that can create problems that you will be unable to understand, it also even happens with experienced traders. If you are someone who wants to increase his financial knowledge then this blog from 5XTrade will cover some of the most used words in Online trading and finance.
Asset: A resource that is owned for future economic benefits, stocks, bonds, and real estate are the most popular assets.
Bear Market: It is a period when the price in the market drops 20% or more from a recent high, this reflects downward economic conditions.
Consolidation: This is the phase when the market volatiles at a low price which also indicates a breakdown in the market.
Dividend: It is the amount of the earnings of a company that is given to its shareholders as stocks or cash. That helps in maintaining financial stability.
ETF (Exchange-Traded Fund): A fund used to trade on the stock exchange and diversify assets and offers liquidity.
Fundamental Analysis: Analysing the value of a security based on various economic and financial factors.
Growth Stock: Stocks that offer high potential returns and are expected to grow faster than the market average.
IPO (Initial Public Offering): The first sale of shares of any private company to the public. Ipos help gain good capital for a company’s growth and expansion.
Knock-Out Option: An option that is helpful when the price barrier is hit, it gives a better risk management system with lower premiums than original options.
Leverage: Using borrowed funds to improve returns on investments. It helps boost profit but also increases the risk of getting losses.
Market Maker: Wherever an individual or a firm quotes buys and sells prices to provide volatility in the market then they are known as market makers. They usually gain profit from stable and spread trading.
Overbought and Oversold: These terms are used to indicate that a security is trading above or below the expected value. It can also help to get the indication of financial reversal with a correct technical analysis.
Portfolio:
Collection of financial assets that are properly managed to achieve some special goals, and a diverse portfolio helps to minimize the risk and gain good returns on investments.
Return on Investment (ROI):
Return on investment is a term that is used to calculate the profit on an investment, it is calculated by net profit and initial invested amount.
Volume:
Volume is the total number of shares traded in a period. High volumes mean a strong market that affects the moment of the price.
