Saturday, June 27, 2009

Terms used in trading ( for beginners)

In stock market, they always uses some terminology.. many of us who started investment do not know all of them. So, here are definitions to the terminology...reference from several website including wiki.

an individual is an agent of a stock broker company and receives a commission for each transaction handled. The remisier need to bear the credit risk of his client.

Day Traders
trader who buys and sells financial instruments (eg stocks, options, futures, derivatives, currencies) within the same trading day such that all positions will usually be closed before the market close of the trading day.

Speculators who buy and sell financial instruments

Participants in the stock market who assume very high risk in order to earn very high short term capital gains

A paid employee of the stock broker company. Act as the agent for buying/selling.

Bear/bearish market
A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining

Bull/Bullish market
A financial market of a group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used to refer to the stock market, but can be applied to anything that is traded, such as bonds, currencies and commodities.

Blue chips
the stock of a well-established company having stable earnings and no extensive liabilities. The term derives from casinos, where blue chips stand for counters of the highest value.

Red chips
are the stocks of mainland China companies incorporated outside mainland China and listed in Hong Kong.

Market order
A market order is an order to buy or sell a stock at the current market price. Unless you specify otherwise, your broker will enter your order as a market order.

Limit order
A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

Forced selling
Resales of securities due to buyer failure to pay up
Short selling

short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party with the intention of buying identical assets back at a later date to return to the lender.

*Contra trade
A contra trade is an offsetting trade which is used to cancel out the effect or possible loss of an earlier trade.
*Futures trading

* both terms are not that easy to understand.. i shall post another soon to try explain them from what I learnt.

A long term call option. Maturity average= 5years

For readers who have met interesting terms and dont know the meaning yet, feel free to comment, will try to answer!:)

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