With the advent and progress of online trading accounts, the stock market is no longer reserved for the select few.
Now, every everyone has access to Wall Street via the brokerage platform they decide on as an investment tool. If you are taking the first steps into the world of stock market trading, you surely realize that the industry is built on so much more than simple buying and selling procedures. There are several common trading terms that you need to know in order to maximize your understanding of stock market trading.
Some common methods of trading include:
- Automatic Buy/Sell Order – Setting up electronic conditions in a program stating that if a stock hits a certain targeted position, your account will automatically buy or sell the security (based on your selections)
- Exercise – Buying or selling the underling optioned material only if the material is in a winning position
- Front – Buying or selling a stock before it is promoted publicly
- Hedge – Stock strategies such as buying or selling the stock or using an option used to mitigate the risk of loss
- Leverage – To use investment instruments or borrowed funds to increase the odds of scoring gains on an investment
- Short Selling – The process of betting against a stock; borrowing the worth of a stock at current market value and reselling at a lower price point, keeping the difference
- Stop Limit Orders – Used to lock in potential profits for conducted trades by automatically converting a bid into a limit order when a certain price is reached, which does not guarantee the purchase or sale of a stock
- Stop Orders – Used to lock in potential profits for conducted trades by turning a bid into a buy when a predetermined price is reached, and the traditional rules of market orders apply
You’ll need to learn more about the ins and outs of trading, and a good place to start is by familiarizing yourself with some key terms and concepts.