For new investors, entering the stock market can be intimidating with jargon like “dead cat bounce,” “whales,” and “bear market” dominating the space (and while it may sound like a zoo, make sure that no real animals are involved). ).
As such, many investors turn to search engines like Google for answers, with the term “stock market” itself receiving over 2.4 million searches on Google each month according to search engine optimization software Ahrefs.
Financial services provider CMC Markets used global search data from Google to understand which terms are causing the most confusion among investors.
READ: CMC Markets on track to diversify income, says broker
CMC Markets chief market analyst Michael Hewson said it was no surprise that many people found financial markets terminology confusing.
“As market professionals, we have to get used to new acronyms on a regular basis, and that’s before considering the ones that are commonly used,” he said.
“If you want to hone your interest in financial markets, it’s a huge benefit if you can understand the language that’s used on a regular basis.”
The most commonly used financial terms have been explained
According to CMC Markets’ analysis of global Google search data, these are the top 15 stock market terms that internet users want to understand and what they mean.
ETF (average monthly searches 103,000): ETF stands for Exchange Traded Fund. An ETF is an investment fund made up of various assets that can include stocks, commodities, bonds or a mix of investment types known as holdings. ETFs trade on an exchange like stocks do. ETFs are generally considered safer investments because they are less volatile than individual stocks.
IPO (average monthly searches 95,000): IPO stands for initial public offering. An IPO occurs when a private company offers its shares to the public on a stock exchange for the first time. IPOs are used to raise capital and boost the public profile of companies.
Running Man (average monthly searches 46,000): A broker is a person or company that buys and/or sells securities on behalf of an investor. They can also provide investors with research, investment advice and market intelligence.
Arbitration (average monthly searches 23,000): Arbitrage is the simultaneous buying and selling of securities, currencies or commodities in different markets to take advantage of different prices for the same asset. For example, if a stock is trading at $10 on the New York Stock Exchange (NYSE) and $11 on the London Stock Exchange (LSE), a trader could buy the stock on the NYSE and immediately sell it on the LSE for a profit of $1 per share.
ADR (average monthly searches 22,000): ADR stands for American Depositary Receipts. ADRs are securities issued by a bank that represent shares of a non-US company listed on a US stock exchange. They provide US investors with exposure to non-US stocks without adding the complexity of trading foreign stock markets.
Bear market (average monthly searches 11,000): A bear market occurs when there is a continuous decline in stock price, usually when a broad market index falls 20% or more from its most recent high.
bull market (average monthly searches 7,600): A bull market is the opposite of a bear market, which occurs when the price of securities continuously increases.
to the moon (average monthly searches 4,900): The over-the-moon phrase, often accompanied by a rocket emoji online, is used by an investor about a stock they believe is going to see a big rally. The phrase is popular among meme and cryptocurrency traders.
Dividend yield (average monthly searches 3,900): Dividend yield is a financial ratio that shows investors what percentage of a company’s share price it pays out in dividends each year.
The dead cat bounces (average monthly searches 3,200): A dead cat bounce occurs when there is a temporary rise in stock prices after a substantial decline caused by speculators buying to cover their position. The phrase comes from the Wall Street expression “even a dead cat will bounce if dropped from a great height.”
closing (average monthly searches 2,400): A stock is going down when its price drops very quickly. It often occurs when companies report quarterly earnings that fall short of market expectations or when negative news is released.
Average down (average monthly searches 2,300): Downward averaging is an investment strategy that involves investing additional money in a stock as the price declines to reduce the average cost of each stock.
the whales (average monthly searches 1,800): A whale is a nickname given to investors, both individuals and companies, who have enough money or power to manipulate the market, usually by making a substantial investment or cashing in on a large position in a particular stock or security. .
Trading day (average monthly searches 1,700): Day trading is an investment strategy that involves buying and selling stocks during the same day to profit from short-term price movements.
margin account (average monthly searches 1,600): A margin account is a type of brokerage account through which a broker lends cash to an investor to purchase securities using the account as collateral. In return, the investor pays the broker a periodic interest rate.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie
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