Stock Market: Terminology

Basic concepts in trading

• Shares are the securities issued by a company. They secure the owner’s rights to a portion of the profits and the organization, as well as a share of the property remaining after its liquidation.
• Stock exchange is a legal entity that acts as an organizer of trade according to developed rules. A place where sellers and buyers trade currencies, securities, goods and derivative financial instruments.
• Balance sheet is a financial report that shows all the liabilities and assets of the company. It is used to assess the financial condition of an individual or business.
• Annual report is a report on the company’s activities, which the executive body annually submits to the shareholders’ meeting for review.
• Blue chips are shares of the most famous, highly profitable companies represented on the market. They are among the top leaders in turnover on the stock exchange.
• Dividends are a portion of the profit of a joint-stock company that is distributed among the owners of securities issued by the company. The share is determined based on the number of shares owned and their type.
• Bid is the price at which buyers are willing to buy the selected instrument.
• Ask is the price at which sellers are willing to sell the instrument.
• Debt securities are short-term securities that are initially sold below par. Subsequently, at the end of the loan term, the owner receives their full value.
• Yield is a parameter demonstrating the return on investment after deducting capital gains. A quantitative indicator of how much the funds invested in the transaction have paid off.
• Capital is money that can be used to generate income. Includes both the cost of tangible objects (buildings and equipment) and intangible ones (patents or trademarks).
• Liquidity is an economic indicator of how quickly existing assets can be sold at or near market price, the ability to quickly and without losses exchange shares for money and vice versa.
• Limit order is an assignment given by a client to a broker, obliging him to sell or buy shares at a specified or most favorable price.
• OTC (over-the-counter) is a type of trading in which the buyer and seller interact with each other, doing without the services of the exchange, over-the-counter trading.
• IPO (Initial Public Offering) - the initial placement of shares on stock exchanges, after which the securities become available for purchase by investors.
• Futures - an agreement between a seller and a buyer, securing the right to deliver securities, currency or other underlying asset in the future at a price set now.
• Hedge - an agreement to sell or purchase a futures contract as a temporary replacement for an upcoming transaction with a real product.
• Bet price - the sale price of shares and stocks.
• SEC (Securities and Exchange Commission) - an American government agency responsible for regulating the US stock market, the Securities and Exchange Commission.
• Brokerage commission - the amount requested by the broker for their services. Most often, the commission is tied to the number of shares traded by the client.

Having studied the presented terms of stock trading, you will be able to better understand the features of the stock market. A short educational program will help novice traders understand the specifics of working with exchanges and improve their financial situation.