30 Stock Market Terms Every Trader Should Know

The stock market is full of industry terms that can be intimidating to new and seasoned investors if you’re not trained up on their meaning. As an investor, one of the main activities is sharing and discussing trade ideas — and your wins. To keep up with the lingo, we’ve put together a list of industry terms along with slang. This will help you dive right in with the pros.

First, we’ll start with the basics.

What is the stock market?

Before diving into the key terms, it’s important to understand what the stock market actually involves.

The stock market is any exchange that allows a trader to buy and sell stocks and companies to issue stock.

Plain and simple, a stock in a company represents their overall equity and shares are pieces of that company. Buying and selling a stock means that the trader has either bought or sold one or more shares of that particular stock.

30 Key Stock Market Terms Every Trader Should Know:

  1. Assets: To calculate the total value or wealth of a company, it involves the grand total of their assets. Assets could include technology, company cash, developments, equipment and more.
  2. Agent: A stock agent is a person or a brokerage firm that is appointed by the insurer who acts on behalf of the client that’s buying or purchasing shares.
  3. Annual Report: A report that contains the most valuable information about the company at hand. This would include reports such as their money-management strategies and annual cash flow. These reports are established to help judge the financial state and value of a company.
  4. Broker: A stock or share broker is someone who buys or sells an investment on your behalf for a fee or commission in return.
  5. Bear Market: Bear claws turn down and the same goes for a bearish market. It means the trend is moving downward or a period when stock prices are falling.
  6. Bull Market: Bull horns go up and so does a bull market. If the stock market is increasing stock prices, and the market is rising, it’s a bull market.
  7. Bull Trap: A false signal indicating that a declining stock or currency has reversed and is heading back higher when in fact, the stock was only retracing to again trend lower.
  8. Bear Trap: A false signal indicating that a rallying security has reversed and is heading back lower when in fact, the stock was only retracing to again trend higher.
  9. Commodities: Commodities are trades that are placed on a separate platform for products used for commerce. This includes things such as natural resources and other agricultural products.
  10. Call Option: This gives stock investors the right to buy into a particular stock. This is not an obligation, but if they do choose to buy, it is at a specified price within a specific time period.
  11. Close Price: On any given trade there is a best and final price that the stock can be traded.
  12. Day Trading: The trading strategy that involves buying and selling several trades in the same day before the market closes. Many investors get into day trading to create a new source of income. We’ve created a 5-step guide to help investors become day traders.
  13. Dividend: The sum of the company’s earnings paid regularly to the companies shareholders in return of their investment into the company.
  14. Diversify Funds: Investing in different market sectors by purchasing shares to help mitigate risk and increase rewards.
  15. Exchange: Most commonly know for the New York Stock Exchange, an exchange is a market where different investments are traded every day the market is open.
  16. Equity: The overall value of the stocks and share issued by the company.
  17. Face Value: The par value or face value is the amount of money the individual holder of the security from the issuer at the time of maturity.
  18. Free-Ride Trade: Any trade for which your Stop-Loss has been moved into the profits, locking them in, is called a free ride. There is nearly no risk and a win is guaranteed — so sit back and enjoy the ride.
  19. Haircut: When there is a very slim spread between the bid and ask prices of any given stock.
  20. Hit the Bid: Term used to describe selling to close a long trade since a trade closes with the bid price.
  21. Kick Ask: Term used to describe buying to close a short-sell as a trade short closes, using the ask price.
  22. Initial Public Offering (IPO): The initial sale of offering of stock in a company to the general public. These sales are eligible after the company decides to go public inside of solely being owned by private inside investors.
  23. Mutual Fund: Money that is being managed by expert investors to created a more diverse portfolio. This includes the management of stocks, bonds and other investment types.
  24. Order: To buy or sell shares of stock, investors have to put in an order, or a bid, to buy them at a certain amount.
  25. Portfolio: An investor’s portfolio includes the grouping of assets they are invested in. This includes assets such as stocks and bonds.
  26. Quote: Similar to a real estate quote, a quote in the stock market gives you the latest trading price.
  27. Risk: Every form of trading involves a certain level of risk. This can be measured by calculating the standard deviation of the back-tested, historical price returns.
  28. Securities: Assets that can transfer ownership but can only be held by one investor at a time.
  29. Strike Price: The price at which the security can be bought or sold until the expiration date.
  30. Trading Session: One of the most important things to remember is that trading session times may vary by asset class and country. In the U.S. the market hours are from 9:30 a.m. to 4:00 p.m. There are after-market hours as well from 4:00 p.m. to 8:00 p.m.