No one ever said trading was easy, and it certainly isn’t. However, with a little knowledge and a little practice, you can start trading like a pro. Here are some of the most important terms to know when you start out in the trading world.
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 the borrowing of money from an investor. The bond issuer agrees to make regular payments to the bondholder over time until it matures or is repaid.
A future (or forward contract)
A forward contract is an agreement between two entities to buy or sell assets at a fixed price on a fixed date in the future. Futures contracts are commonly used for commodities such as oil or gold, but they can be used for any type of asset.
Margin is the amount of money you must deposit as collateral 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 indecision in the market. It is formed when the opening and closing are within a narrow range, indicating that the market was unable to decide 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 from sudden price drops and prevents you from losing too much money on any given trade.
A bull market
The term “bull market” is most commonly used to refer to the stock market, but it can also be used for other investments, such as bonds, real estate, and commodities. In a bull market, investors generally expect prices to continue rising, although there may be periodic declines 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 generally falls in a bear market. The fashionable phrase 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 stock to the public. When a company goes public, it sells shares of its company to investors and gets the money 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 private investor like you to a large institution. Stockbrokers provide access to financial markets by acting as intermediaries between buyers and sellers. They provide traders with 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 inform yourself as much as possible before investing your money.