BlockchainĪ blockchain is a record-keeping database in which transactions made in Bitcoin or other cryptocurrencies are recorded across multiple computers and distributed across the entire network of those computers. Bid-Ask Spreadīid-ask spread is the difference between what buyers are willing to pay and the price sellers are asking for a stock. The price a trader is willing to pay for shares of a stock or other asset. Generally, a higher beta indicates a riskier investment-if the market rises 10%, the stock will rise by 15%, but if the market falls by 10%, the stock will fall by 15%. A stock with a beta of 1.5 means that the stock typically moves 50% more than the market in the same direction. Betaīeta is the measure of an asset’s risk in relation to the market. Typically, this entails major indexes or stocks decreasing by 20% or more compared to previous highs. Bear MarketĪ bear market is a market condition in which prices are expected to fall. Averaging DownĪveraging down is an investing strategy that involves buying additional shares of an asset or stock after its price has fallen, resulting in a lower average purchase price. Asset ClassesĪsset classes are categories of assets, such as stocks, bonds, real estate, or cash. Asset AllocationĪsset allocation is an investment strategy that aims to balance risk and reward by dividing a certain percentage of investments-like stocks, bonds, real estate, cash, etc.-across different assets in an investment portfolio. AskĪn ask is the selling price that a trader offers for their shares.
ArbitrageĪrbitrage refers to purchasing an asset from one market and selling it to another market where the selling price is higher than what you paid for it, resulting in profit. Study these terms to familiarize yourself with common stock lingo that any new investor should understand. The stock market terms below are a great starting point if you’re new to trading stocks. Trades are typically executed by stockbrokers on behalf of individual investors. The stock market operates by potential buyers naming the highest price they’ll pay for an asset (the “bid”) and potential sellers naming the lowest price they’re willing to sell for (the “ask”). When someone invests in a stock, their investment is represented by a share, or partial ownership, of that company. The stock market is a collection of markets where people buy and sell shares of publicly traded companies. Use the terms below to get a jump start on learning basic stock market vocabulary and create a strong foundation for your long-term wealth goals. Understanding stock market fundamentals is key to making smart investing decisions, keeping a pulse on the market, and eventually taking on more complex trading strategies. Learning to navigate the stock market as a new investor can be intimidating, but getting familiar with basic stock market terms can get you up and running sooner than you’d think.
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