What traders need to know about quotation suppliers

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Contents

Why do traders need to know programming?

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There are many different trading styles, not all of which require programming knowledge, however knowing how to program gives you several advantages.

  1. Objective Decision Making
  2. Ability to backtest
  3. Avoidance of psychological mistakes
  4. Reduced decision making time
  5. Automation / speed

Objective Decision Making

Many will be thinking that programming is all about automation, and it is true that is one of that potential benefits, but the first three points are far more important.

Most traders lose money because they have subjective and inconsistent decision making approaches. When decision making is subject.

37 Stock Trading Terms Every Trader Needs to Know

In this post, we go into what we call our “Stock Market for Newbies” information with 37 Terms Every Stock Trader should know!

I’m big on making sure you know the basics before you start investing in penny stocks. That’s why I encourage people to sign up for my Trading Challenge. You learn the basics first and then continue to expand on that knowledge throughout the program.

Here are some stock market terms that you must know if you want to be a profitable trader. I’ll also provide brief definitions of each to help you become familiar with them. Learn them all.

Table of Contents

What Is the Stock Market?

The stock market is any exchange that allows people to buy and sell stocks and companies to issue stocks. A stock represents the company’s equity, and shares are pieces of the company.

When people talk about buying and selling stock, they mean that they’ve bought or sold one or more shares of a particular stock. The purpose for the trader is to make money.

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A person checking stock market data on a mobile device created by solarseven – Shutterstock.com

For instance, if I buy 2,000 shares of Apple stock at $190 and sell it six months later for $210 per share, I’ll make money. If Apple tanks (which isn’t likely), I could lose money, in which case I’d want to sell quickly to limit my losses.

What Do Stock Trading Terms Mean?

Stock market terms are industry-specific jargon for the securities industry. When experts and amateurs talk about trading stocks, they use these stock market terms to speak specifically about strategies, charts, patterns, indices, and other elements of the stock trading industry.

Learning stock market terms will allow you to accelerate the learning process. I tell my Trading Challenge students over and over again to do their research first. If you’re knowledgeable about the stock market, you stand to profit far more than if you trade based on instinct or “hot picks.”

Some stock market terms — such as bull and bear, which I’ll cover below — also apply to other investment vehicles, such as real estate. I’m only going to cover their relationship to stocks, but you might see them pop up in other conversations.

37 Key Basic Stock Market Terms

Let’s look at some of the most important stock market terms you’ll encounter as you learn how to trade stocks. Feel free to bookmark this page so you can return to it later as a handy reference.

1. Annual Report

An annual report is a report prepared by a company that’s intended to impress shareholders. It contains tons of information about the company, from its cash flow to its management strategy. When you read an annual report, you’re judging the company’s solvency and financial situation.

2. Arbitrage

Arbitrage refers to buying and selling the same security on different markets and at different price points. For instance, if stock XYZ is trading at $10 on one market and $10.50 on another, the trader could buy X shares for $10 and sell them for $10.50 on the other market, pocketing the difference.

3. Averaging Down

When an investor buys more of a stock as the price goes down. This makes it so your average purchase price decreases. You might use this strategy if you believe that the general consensus about a company is wrong, so you expect the stock price to rebound later.

4. Bear Market

Trading talk for the stock market being in a downward trend, or a period of falling stock prices. This is the opposite of a bull market. If a stock price plummets, it’s very bearish.

5. Beta

A measurement of the relationship between the price of a stock and the movement of the whole market. If stock XYZ has a beta of 1.5, that means that for every 1 point move in the market, stock XYZ moves 1.5 points, and vice versa.

6. Blue Chip Stocks

The stocks behind large, industry-leading companies. Blue chip stocks offer a stable record of significant dividend payments and have a reputation of sound fiscal management. The expression is thought to have been derived from blue gambling chips, which is the highest denomination of chips used in casinos.

7. Bourse

This stock market term is a little murky. Technically, it’s just another name for the stock market and originates from a house in which wealthy men gathered to trade shares. However, when you hear it in today’s conversations about the stock market, it usually either refers to the Paris stock exchange or to a non-U.S. stock exchange.

8. Bull Market

When the stock market as a whole is in a prolonged period of increasing stock prices. It’s the opposite of a bear market. A single stock can be bullish or bearish too, as can a sector, which I’ll describe later on.

9. Broker

10. Bid

The bid is the amount of money a trader is willing to pay per share for a given stock. It’s balanced against the ask price, which is what a seller wants per share of that same stock, and the spread is the difference between those two prices.

11. Close

The NYSE and Nasdaq close at 4 p.m., with after-hours trading continuing until 8 p.m. The close simply refers to the time at which a stock exchange closes to trading.

12. Day Trading

The practice of buying and selling within the same trading day, before the close of the markets on that day, is called day trading. This is my primary trading strategy, although I have a long-term portfolio, as well. Traders who participate in day trading are often called “active traders” or “day traders.”

13. Dividend

A portion of a company’s earnings that is paid to shareholders, or people that own that company’s stock, on a quarterly or annual basis. Not all companies pay dividends. For instance, if you trade penny stocks, you’re likely not after dividends.

14. Exchange

A place in which different investments are traded. The most well-known exchanges in the United States are the New York Stock Exchange (NYSE) and the Nasdaq.

15. Execution

When an order to buy or sell has been completed, the trader has executed the transaction. If you put in an order to sell 100 shares, this means that all 100 shares have been sold.

16. Haircut

In its most simplest stock market terms, a haircut is an extremely thin spread between the bid and ask prices of a given stock. It can also refer to a situation in which a stock price gets reduced by a specific percentage for margin trades or other purposes.

17. High

A high refers to a market milestone in which a stock or index reaches a greater price point than previously. Record highs can signal that a stock or index has never reached the current price point, but there are also time-constrained highs, such as 30-day highs.

18. Index

A benchmark that is used as a reference marker for traders and portfolio managers. A 10 percent return may sound good, but if the market index returned 12 percent, then you didn’t do very well since you could have just invested in an index fund and saved time by not trading frequently. Examples are the Dow Jones Industrial Average and Standard & Poor’s 500.

19. Initial Public Offering (IPO)

An IPO is the first sale or offering of a stock by a company to the public. It happens when a company decides to go public rather than remain solely owned by private or inside investors. The Securities Exchange Commission (SEC) has strict rules that companies must follow before issuing an IPO.

20. Leverage

I’m not a fan of leverage, but it’s good for you to know this stock market term. When you use leverage, you borrow shares in a stock from your broker with the goal of increasing your profit. If you borrow shares and sell them all at a higher price point, you return the shares and keep the difference. It’s a dangerous game that I urge you to avoid playing.

21. Low

Low is the opposite of high. It represents a lower price point for a stock or index.

22. Margin

A margin account lets a person borrow money (take out a loan, essentially) from a broker to purchase an investment. The difference between the amount of the loan and the price of the securities is called the margin.

Trading on margin can be dangerous because, if you’re wrong about the direction in which the stock will go, you can lose significant cash. You must often maintain a minimum balance in a margin account.

23. Moving Average

A stock’s average price-per-share during a specific period of time is called its moving average. Some common time frames to study in terms of a stock’s moving average include 50- and 200-day moving averages.

24. Open

In the United States, the stock market opens at 9:30 a.m. Eastern time every day. It’s based on the trading hours of the Nasdaq and NYSE. Pre-market trading hours begin at 4:30 a.m. Eastern, but most traders don’t begin paying attention until about 8 a.m. Essentially, open refers to the time at which people can begin trading on a particular exchange.

25. Order

An investor’s bid to buy or sell a certain amount of stock or option contracts constitutes an order. You have to put an order in to buy or sell 100 shares of stock, for instance.

26. Pink Sheet Stocks

The term “pink sheets” refers most commonly to penny stocks, which are traded at $5 per share or less. They’re also called over-the-counter stocks because that’s how they are traded. You won’t find them on the Nasdaq or NYSE, or any other major exchange, and they’re often smaller companies.

27. Portfolio

A collection of investments owned by an investor makes up his or her portfolio. You can have as few as one stock in a portfolio, but you can also own an infinite amount of stocks or other securities.

28. Quote

Information on a stock’s latest trading price tells you its quote. This is sometimes delayed by 20 minutes unless you’re using an actual broker trading platform.

29. Rally

A rapid increase in the general price level of the market or of the price of a stock is known as a rally. Depending on the overall environment, it might be called a bull rally or a bear rally. In a bear market, upward trends of as little as 10 percent can qualify as a rally.

30. Sector

A group of stocks that are in the same industry belong to the same sector. An example would be the technology sector, which includes companies like Apple and Microsoft. Some traders prefer to trade in a specific sector, such as energy, because they know the industry well and can better predict stock price fluctuations.

31. Share Market

Any market in which shares of a particular company are bought and sold. The stock market is an example — and probably the most significant example — of a share market.

32. Short Selling

When you short-sell a stock, you borrow shares from someone else with the promise to return them at a point down the road. You then sell the stock for a profit. It’s a way to take advantage of a stock that you believe will decrease in price. After you sell short, you can buy back the shares at the lower price point and take the difference in price as your profit.

I use short selling on a regular basis. It’s often a smart move in a volatile market if you see patterns that indicate a sharp downward turn for a stock.

33. Spread

This is the difference between the bid and the ask prices of a stock, or the amount for which someone is willing to buy it and the amount for which someone is willing to sell it. For instance, if a trader is willing to trade XYZ stock for $10 and a buyer is willing to pay $9 for it, the spread is $1.

34. Stock Symbol

A stock symbol is a one- to four-character alphabetic root symbol that represents a publicly traded company on a stock exchange. Apple’s stock symbol is AAPL, while Walmart’s is WMT.

35. Volatility

The price movements of a stock or the stock market as a whole. Highly volatile stocks are those with extreme daily up and down movements and wide intraday trading ranges. This is often common with stocks that are thinly traded or have low trading volumes.

I’m a big fan of high-volatility stocks because I can make a big profit off spikes or dips, depending on how I’m trading, in a short period of time. High volatility often makes trading more exciting, but it’s also risky if you’re inexperienced.

36. Volume

The number of shares of stock traded during a particular time period, normally measured in average daily trading volume. Volume can also mean the number of shares you purchase of a given stock. For instance, buying 2,000 shares of a company is a higher-volume purchase than buying 20 shares.

37. Yield

Often refers to the measure of the return on an investment that is received from the payment of a dividend. This is determined by dividing the annual dividend amount by the price paid for the stock. If you bought stock XYZ for $40 per share and it pays a $1.00-per-year dividend, you have a “yield” of 2.5 percent.

The Bottom Line

Knowing your stock market terms will make you a better trader. It takes time to grasp the intricacies of securities trading, but once you do, the stock market terms above will become part of your daily vocabulary.

I urge you to quiz yourself on stock market terms until you’re highly familiar with them all. You can also explore other stock market terms as they pop up in your research so you don’t get confused.

If you’re interested in learning how to trade stocks, consider applying for the Trading Challenge. I’m currently hunting for my next successful student, and I look forward to working with you in the future.

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About

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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      Comments ( 30 )
      Hey Everyone,

      As many of you already know I grew up in a middle class family and didn’t have many luxuries. But through trading I was able to change my circumstances –not just for me — but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

      Which is why I’ve launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

      So when you get a chance make sure you check it out.

      PS: Don’t forget to check out my free Penny Stock Guide, it will teach you everything you need to know about trading. :)

      Warren Buffett says, Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

      Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.

      I am just an ordinary person who works in uae and i just want to try this..as i am very much interested in knowing what this is all about..and start my own in the future..because as a beginner and having not so much money to start with..i really wanna know everything first..many thanks..

      Cool, start with these free video lessons http://tim.ly/sykes7

      Thank u I love the market an I’m Yes alw learning after so many years also so u know.

      I must say Everyone said don’t buy Facebook stock wen it was 20 per sheer an I’m proud that I did a great stock like my Google baby class A people. LIke I figured out if you own 2000 sheers of Fb stock an wen it hits 500$ per sheer U just grew a million dollors wow ! For real not fake dew the math an treat stocks like a bond don’t sell until it touches 500 per sheer. Simple math take 500 x 2000 what’s it come out too yes it dose one million dollors but alw weather the storm an waight an stick too your selling target price 500 an be thankfully.

      http://www.investopedia.com is a better website than this

      LOL its great for the basics, but the basics dont create millionaires…i do ��

      A epic reply����This happens when a pro answers a noob

      If Robert from the above reply can make money doing this, anyone can. That guy can’t even spell. And he thinks a “share” is a “sheer”

      Typos are irrelevant

      These list are great for quick references for beginners. Investopedia is good as well but Tim Sykes keeps it simple and easier to understand and actually gives you guidance on how to make money

      It is not that hard to figure out what SFOR is doing or working on, strategy and ground work was laid out and Kay is executing the plan as planned which is reflected in past few events like

      Hi Tim, great fan.
      I live in India. Would your strategies/techniques be applied on Indian Stock exchange such as BSE/NSE as well.

      i will be dedicated as I am in this for the long haul

      Hi. I live in India. Do you think the strategies/techniques what you apply on NASDAQ would be applied similarly on Indian Stock exchange such as BSE/NSE?

      I would like to meet in person with someone, to go over all this… I would like to.

      These will come in very handy when I start my new adventure in trading thank you. Is there any other content you offer that could ease my introduction into the industry Tim?

      Hi Hello,
      My name is Grace and I am from Papua New Guinea. I work as a junior accountant with a financial institution. I have been interested in stock trading since my high school days but I am a bit risk-averse in this exercise. However, I found this website encouraging and will certainly tried it out. Thanks Timothy for all your effort in putting all this together

      I have been studying your video, youtube and e-book materials every day now for 12 days. Getting my “ducks in a row” before I start a serious initiative with your Millionaire Challenge. Great stuff . Thanks for caring enough TEACH. I have been “Screwed Over” By a Broker in 1998 to 2000 Bull Market . I was a fool then but have learned my lessons. Enough said. Will join you soon.

      Hi Can u also tell about, ow an IPO is made, Pre IPO trading and about that stuff?

      The majority of these terms are making sense and I didn’t have to look up more information about them, hey!
      Thank you. I’m studying my buns off for freedom, mine!

      I have seen you on Wall Street Warriors and was quite impressed. How do I get to learn what you do?

      SUPER PROFESSIONAL MAN

      Leave a Reply Cancel reply

      About Timothy Sykes

      I became a self-made millionaire by the age of 21, trading thousands of Penny Stocks – yep you read that right, penny stocks. You may have heard . Read more

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      ** Results may not be typical and may vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here..

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      What Does It Mean to ‘Go Long’ in Forex?

      What New Traders Need to Know About Going Long

      In foreign exchange trading (forex), as in all market trading, to go long means to buy with the expectation that your purchase will rise in value. It’s the opposite of going short, which is when you expect the value to fall. In forex, the purchase you are making is a currency, and when you go long, you profit when the value rises; when you go short, you profit when the value falls.

      What New Traders Should Know

      To trade foreign currency, you buy or sell a currency pair. All currency pairs have a base currency and a quote currency. The pair usually looks something like this: USD/JPY = 100.00. Here, the USD, or U.S. dollar, is the base currency and the JPY, or Japanese yen, is the quote currency. This quote shows a rate of $1 being equal to 100 yen.

      Because every currency trade involves a pair, you will always simultaneously go long on one currency and short on the other when making a trade. When you are long a currency, it means you are betting the base currency will strengthen against the quote currency. In the example above, you’d be betting the dollar would be equal to more than 100 yen in the future.

      So in a long trade on this currency pair, you are buying, or going long on, the dollar and you’ll simultaneously go short on the yen. In effect, you are selling the yen, just like when you short a stock by selling shares.

      To borrow an example from the stock market: When you buy the stock of a company such as Apple (NASDAQ: AAPL), you are going long in Apple stock and short the dollar because you feel the value of a dollar will not grow as fast as the value of Apple stock.

      You could also look at this relationship as APPL/USD. Also, when you sell your stock back, you can think of it as going long in the US dollar, and short on the stock because for one reason or another you now believe it is more valuable to have cash in dollars​ than it is to hold the stock.

      How to Go Long

      Because you’re both buying and selling currency when you make a forex trade, you can speculate on both the upward and downward movements.

      To go long on a certain currency, you open a trade in a buy position, because you believe the base currency is bullish—likely to rise in value. At the same time, it also means you are bearish on the value of the quote currency, and think it will fall.

      If you’re correct and the value of the base currency rises, you can close out your trade then at the current market price and take a profit.

      You can measure the changes in value in pips: a pip is 0.0001 of the value of the quote currency (except for yen, where a pip is .01 of the value).

      Why Go Long in Forex?

      Some of the reasons that traders go long come from technical as well as fundamental developments.

      With fundamental analysis, you’ll be looking at economic news related to the currencies in question. For example, if news releases start to overshoot or surprise economists’ expectations, this shows that the economy is doing better than many people expected and there’s room for upside on that currency. Therefore, it may be worth buying the currency, or going long.

      Another reason forex traders may decide to go long a currency pair is when a central bank announces its plans for monetary tightening, which historically tends to lift its currency’s value.

      Technical reasons for going long often include currency prices breaking through a certain price-level resistance or a price ceiling. This would show surprising strength in the currency’s price mobility and that a new market imbalance may be developing that could turn into a strong trend. Traders also tend to go long when the currency price comes down to a well-defined support level or a price floor.

      Trend-following traders who watch trend acceleration often go long on a trade position and hope to stay in that trade until the trend expires.

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