- You need to know the language if you want to play the game.Stock Market Crash image by Paul Heasman from Fotolia.com
The stock market has become a world unto itself with what amounts to its own language. If you want to play the game of the stock market, you need to speak the language. There are many stock market terms that are never used outside of this small world, but that encompass some very important concepts within it. - An arbitrage is a transfer of assets between markets by selling a particular stock on one market and buying it on another market. By selling the one that is priced higher on one market and buying the one that is priced lower on the other market, the trader can make a profit.
- Blue chip stocks are the ones that everyone wants: stocks in nationally or internationally recognized companies with a proven record of investment return and a good likelihood of future profit.
- Dividends are the reason that people invest in the stock market. A dividend is the money that is made from the investment. The amount of dividend to be paid out on a stock is decided by the company's Board of Directors, and is usually paid to investors on a quarterly basis.
- The term Short Term Gain refers to the dividends received by an investor on stocks that have been held for 12 months or less.
- The right given to an investor to buy or sell stocks at a given price prior to a deadline, after which the option expires. There is no obligation to buy or to sell. A "put option" refers to selling, and a "call option" refers to buying.
- A short sell is when an investor sells a stock that he doesn't yet own, with the intention of buying it in the future at a lower price. This is a risky trading strategy, since it depends on future unknowns.
- A Transfer Agent is a subcontractor who has been hired by a trading company to keep track of its stocks, investors and who owns what. Dividends are frequently distributed through transfer agents.
- A Thin Market is a market in which there are relatively few stocks being traded due to a lack of stocks for sale or to a lack of buyers. The term can refer to conditions within the trading of a particular stock, or to the stock market in general.
Arbitrage
Blue Chip Stocks
Dividend
Short Term Gain
Option
Short Sell
Transfer Agent
Thin Market
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