The stock market can be intimidating, especially if you don’t know the lingo. Before you walk the walk, you’ve gotta talk the talk!

Don’t worry: While trading comes with its own dialect, it’s not hard to decipher once you get the hang of it. To help you start building a strong trading vocabulary, we’ve put together some of the most important terms for new traders.

Here’s a glossary of 40 key stock trading terms for beginners. Keep this list handy when screening for potential trades on StocksToTrade. With this handy guide, market terms will start making way more sense!

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For those that would rather not look at our epic infographic, the 40 Trading Terms are also listed below!

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Here’s a glossary of 40 key stock trading terms for beginners. Keep this list handy when screening for potential trades on StocksToTrade. With this handy guide, market terms will start making way more sense!

Buy

Take a position or buy shares of a stock.

Sell

Get out of a position or sell the shares you’ve purchased. As a shareholder, you typically sell for two key reasons: You reach your goal or you want to cut your losses.

Bid

The price that a buyer is willing to pay for shares of a stock.

Ask

The price that people seek when selling their stock shares.

Bid-Ask Spread

The difference between the price that buyers are willing to pay and what sellers hope to make. The spread must be resolved before a transaction can take place.

Bull Market

A market condition where stock prices are expected to rise. A bull market is characterized by optimism, high expectations, and a high level of investor confidence in general.

Bear Market

The opposite of a bull market and marked by pessimism and low expectations. In a bear market, investors expect stock prices to fall. This is where short sellers shine.

Limit Order

A type of stock order that provides instruction to only execute at or under a purchase price or at or above a sale price. Always use limit orders, not market orders.

Market Order

A market order provides instruction to execute, as quickly as possible, a transaction at the present, or market, price. Don’t use market orders.

Good Til Canceled Order

Also referred to as a GTC order. This order to either buy or sell a stock remains open until the order is either executed or until you cancel it. If you don’t manually cancel the order, it will be executed whenever the stock comes to your price — even if that’s weeks or months down the road.

Day Order

An order that’s only good on the day that you place it. If not executed, it’s automatically canceled at the end of the day.  

Volatility

How fast a stock price moves up and down. The more rapid the movement, the greater the volatility.

Liquidity

How quickly and easily you can buy or sell a stock.

Trading Volume

The number of shares being traded each day. This factor has huge implications on a stock’s liquidity.

Going Long

By going long, you’re betting that the company’s stock will increase in price. You’re looking to buy low and sell high.

Averaging Down

This is when an investor buys more of a stock as the price goes down. This results in a decrease in the average price at which the investor purchased the stock.

Capitalization

Market capitalization, or market cap, refers to what the market thinks a company’s value is.

Public Float

This is the number of shares that are actually available to the public, after subtracting the shares controlled by insiders (like the company’s C-suite and early investors).

Authorized Shares

This is the total number of shares that a company can trade. It’s always larger than the public float.

IPO

IPO is short for initial price offering, which happens when a private company becomes a publicly traded company to raise money.

Secondary Offering

If a company’s stock is doing well, they may offer more shares to boost sales and raise more money.

Blue Chip Stock

These are large industry-leading companies that offer stable dividend payments.

Forex

Forex is short for foreign exchange and involves trading different currencies.

Hedge Funds/Mutual Funds

Hedge funds and mutual funds are two different types of investment accounts you can buy into. The fund manager will then invest your money in dozens, hundreds, or even thousands of stocks.

ETF

ETF is short for exchange-traded fund. ETFs are like stocks — you can buy and sell shares. They’re also like mutual funds because they track an index.

ADR

ADR is short for American depositary receipt. You can purchase ADRs like stock shares for foreign companies that trade in the U.S.

Beta

A measurement of the relationship between the price of a stock and the movement of the whole market. If stock XYZ has a beta of 1.5, that means that for every 1-point move in the market, stock XYZ moves 1.5 points.

Broker

A person who buys or sells securities on your behalf in exchange for a fee.

Day Trading

The practice of buying and selling within the same trading day, before the markets close.

Dividend

This is the portion of a company’s earnings that’s paid on an annual or quarterly basis to shareholders (the people who own the company’s stock). Not all stocks offer dividends.

Exchange

An exchange is a place where different investments are traded. The most well known in the U.S. are the New York Stock Exchange and the Nasdaq.

Execution

When an order to buy or sell is complete. If you put in an order to sell 100 shares, this means that all 100 shares have been sold. If only 90 shares were sold, the order is considered partially executed.

Margin

A margin account lets a person borrow money (take out a loan) from a broker to purchase an investment. The margin is the difference between the loan amount and the security price.

Moving Average

A stock’s average price per share during a specific time period. Some common time frames are 50-day and 200-day moving averages.

Portfolio

A collection of investments owned by an investor.

Quote

Information on a stock’s latest trading price. This is sometimes delayed by as much as 20 minutes unless you’re using an actual broker or trading platform.

Rally

A rapid increase in the general price level of the market or of a given stock’s price.

Sector

A group of stocks that are in the same business. An example is the technology sector, which includes companies like Apple and Microsoft.

Stock Symbol

A unique alphabetic symbol that represents a publicly traded company on a stock exchange. Also known as a ticker.

Yield

This refers to the measure of the return on an investment that’s received from the payment of a dividend.

Conclusion

If you want to find success as a trader, you’ve got to speak the language. This list includes 40 key trading terms that every newbie should know. Study it, keep it handy, and use it on your trading journey!

What stock term do you need us to define or clarify? Leave a comment and let us know!