Share trading guide: key terms

If you are new to share trading, you might find yourself quickly overwhelmed by the strange terminology that gets bandied about by traders and brokers.

Here is a brief share trading guide to some commonly used terms.

Bull Market – a market in which prices are on an upward trend.

Bear Market – a market in which prices are on a downward trend.

Close – the endpoint of a trading day. This term is also used when talking about the last price a given stock sells for on a trading day.

High – the highest price paid for a stock in a particular time period (eg day, week, month). The high for the day may be $19, but the high for the month may be $24.

Margin (buying on) – a transaction for the which the buyer borrows money in order to buy extra shares, and uses the shares themselves as collateral for the deal.

Short Selling – borrowing a security from a broker and selling it, in the hope that when you buy it back later you do so at a cheaper price. The risk is that if the stock improves, you will have to pay extra to cover your short position.

Stop Order – an instruction issued to your broker to sell when a stock hits a certain low point. Designed to limit your losses.