Glossary
CAPITAL GAIN – a profit generated from a rising stock
CFD – contract for difference. A financial instrument that enables you to profit from the price movements of securities without actually owning the underlying security
COMMON STOCK – Shares of ownership in public corporations
DIVERSIFICATION – spreading your money out over many different investments to lower portfolio risk
DIVIDENDS – cash payments that some companies make to shareholders out of their profits
GOING LONG – buying a security
GOING SHORT – selling a security
INVESTOR SENTIMENT – the general mood of investors
LEVERAGE – using capital borrowed from a broker when opening a position to increase the potential return of an investment
MARKET CAPITALISATION – the total value of a company’s shares
MARKET RISK – the risk that the whole stock market falls
RISK – the amount of capital exposed on any single trade
RISK MANAGEMENT – focusing on risk when trading in order to minimise losses
SPREAD – the difference between the buy and the sell price. This is also the cost of placing the trade
STOCKS – investments that represent ownership in a company
STOCK EXCHANGE – a market that connects stock buyers with stock sellers
STOCK SPECIFIC RISK – the risks associated with a particular stock
STOP LOSS – an order designed to minimise losses
TAKE PROFIT – an order to close a trade at a certain profit level
Reprinted from eToro, the copyright all reserved by the original author.
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