Getting into the financial trading game is one of the smartest things you’ll ever do, the rewards can be endless. But we at the Academy of Financial Trading know that if you ever hope to succeed playing the financial trading game, you need to know the rules.
Or in any case the terms. Like all professional sectors, the finance sector has its own language, its own way of communicating, almost like a secret code. This is hardly unusual, doctors have jargon and so do lawyers. Jargon is almost like a sign you belong in the game - if you know how to speak the language then you know how to play the game.
That’s why we’re here. Think of the Academy of Financial Trading as your translators; we help you understand how to play the game. If you want to learn to speak the language, check out our guide to some of the most basic financial trading jargon.
Trader – A trader buys and sells stock frequently to generate large returns quickly. They tend to get out of a trade before any significant losses are made.
Investor – An investor gradually builds wealth by buying and holding stocks in growing companies. They will usually have engaged in a thorough analysis of these companies to determine whether something is good value (under-priced) or bad value (over-priced).
Shares – A share is a unit of ownership in a corporation or a financial asset
Shareholder –A shareholder is an owner (usually part owner depending on how many shares they have bought) of the company they have bought shares in.
Stocks – a type of security that signifies ownership in a company and represents a claim on part of the company’s assets and earnings. There are two types of stock
- Common Stock – This type of stock usually entitles the owner to vote at shareholders meetings and to receive dividends
- Preferred Stock – This type of stock generally does not infer voting rights onto the owner, but they have a higher claim on assets and earnings than common shares.
Stock Market/Exchange – This is the place where Stocks are bought, sold and traded. Famous Stock Markets include The New York Stock Exchange and London’s FTSE 100.
Broker – The person who buys and sells investments and stocks for you for a commission. These are the people who carry out your wishes on the floors of the Stock Exchanges of the world.
Capital Investment – this term refers to the fund’s investment in a firm or enterprise for the purpose of helping it grow, helping it make profit and further it’s business objectives. It’s literally the money you invest in the company.
Floatation – Also known as offering or rights Issue, flotation is the process a company goes through when it puts its shares onto a particular stock market so that people can buy shares in their company.