Financial services provider CMC Markets<\/a> used global search data from Google to understand which terms are causing the most confusion among investors.<\/p>\nREAD: CMC Markets on track to diversify income, says broker<\/h4>\n
CMC Markets chief market analyst Michael Hewson said it was no surprise that many people found financial markets terminology confusing.<\/p>\n
“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.<\/p>\n
“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.” <\/p>\n
The most commonly used financial terms have been explained<\/h3>\n
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. <\/p>\n
ETF<\/strong> (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.<\/p>\nIPO <\/strong>(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. <\/p>\nRunning Man <\/strong>(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.<\/p>\nArbitration <\/strong>(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.<\/p>\nADR <\/strong>(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.<\/p>\nBear market <\/strong>(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.<\/p>\nbull market <\/strong>(average monthly searches 7,600): A bull market is the opposite of a bear market, which occurs when the price of securities continuously increases.<\/p>\nto the moon <\/strong>(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.<\/p>\nDividend yield <\/strong>(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.<\/p>\nThe dead cat bounces<\/strong> (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.”<\/p>\nclosing<\/strong> (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. <\/p>\nAverage down <\/strong>(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. <\/p>\nthe whales<\/strong> (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. .<\/p>\nTrading day <\/strong>(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.<\/p>\nmargin account <\/strong>(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.<\/p>\nContact the author at emily.jarvie@proactiveinvestors.com<\/p>\n
Follow her on Twitter @emilyjjarvie<\/p>\n
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