Economy

Useful Terms to Know for Online Shares Trading

Interested in online stock market trading? If so, keep in mind the fact that when you venture into stock trading, you are bound to come across new terminologies. Therefore, before you start snapping up shares, it would be a smart idea to get familiar with the stock trading lingo. Here are some basic but useful terms to know for online shares trading.

Overweight: Used to refer to an investor’s portfolio holding more of a certain stock compared to the weight of that stock.

Averaging Down: Refers to when an investor purchases shares as their prices go down. This results in a decrease of the average purchase price.

Blue chip stock: These are top-notch companies in the industry. Such companies have a good reputation of distinguished fiscal management and provide a stable record of dividends.

Call option: When an investor has a call option, he/she has the right to purchase a stock at a predetermined price within a specified time. However, a call option is not an obligation. A call option helps limit your risk.

Dividend: Earnings distributed to shareholders by a corporation.

Bull market: Refers to when the entire stock market is experiencing an increase in stock prices for a prolonged period.

It takes time to become well versed in online stock trading. Fortunately, learning some of the useful terms to know for online shares trading is a good place to start.