Financial guides offering advice to Beginners delving into investing spheres will always advise that you first become familiar with the terminology before you move onto the technicalities of the market. As simple as it may sound, learning to speak like an investor is comparable to learning a new language – it isn’t easy. In order to wrap your head around the complexity involved in the this financial sport and become a pro player, tackle the key terms listed below to better understand and, more importantly, communicate with other market participants.
Investing Tips for Beginners – 3 Terms you Ought to Know
Shorting
In many ways the stock market imitates everyday life, i.e. things work the same way. You buy a house, you own a house. You buy a stock, you own a stock. Purchasing a stock is the equivalent of taking a long position – you own it and hope it will increase in value. Following the same train of thought, the only way to quit a long position is to sell said stock.
There are aspects to the stock market however that cannot be compared to the everyday. One such aspect is shorting, which basically stands for selling stock you don’t actually own. A foreign concept to beginners starting out on their investing journey, shorting allows speculators to loan shares and sell them in the hopes that they can buy them back later at a lower price, pocketing the difference. Considered bad form by more traditional investors, the debate about whether this strategy undervalues stock prices continues today.
Currency Caveat
Trading currencies usually take place in the “spot” market, which is very speculative and founded on future realities. Beginners investing in currency caveats will exchange commodities based on whether they think paired currency values will rise and the others will fall.
Sentiment Speak
Other investing terms that beginners usually aren’t familiar with are “bullish” and “bearish.” A bullish investor describes an individual who believes the market will go up. The pessimistic cousin of a bullish trader, a bearish person thinks that the market is in decline.
As Introductions Go
The finance sector is the same as any other industry in terms of its requirements. Your success will definitely be determined by your familiarity with it. In other words, get to grips with its terminology, its strategies – its fundamentals basically and eventually you too will be able to talk the investor talk. Investing for beginners is all about overcoming the language barriers involved in becoming a proactive market player. Translating the terms; subduing the syntax – that’s what it boils down to.
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Bella Gray is a finance blogger who has the inside scoop on the best forex trading platforms. A maestro of tips and strategies for navigating the forex market, Gray is the perfect go-to-gal for all your trading solutions.