Terms in Stock Trading
If you are new in stocks trading it is always best to be familiar with the different terms being used on the subject. As a brief recap, a stock trading is the act of buying and selling of stocks through a broker who acts as a medium for the client and the trader (company). The role of the broker is to find and buy stocks for his client and so as to analyze, discuss and track the current market trends. When you buy a share you become a part-owner of the company where you have instant privilege such as voting rights.
A capital gain is the term used to describe the increase rate that your capital received because of the increase in the companys profits. It is one of the reasons why people consider stock trading as an investment. Stocks can have high capital gains depending on how many shares were purchased. The higher the shares, the greater the capital gains if the market increases value.
A buy and hold strategy is the term to describe when an asset is bought and hold for a long period of time because of predictions or assumptions that a company will perform best in a few years time. Some people exercise this strategy while some dont, for they would not want to wait long enough to access their capital gains. This strategy remains the capital untouched regardless of the rise and fluctuations in the market.
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Current market value is the term used to describe the current worth of a share in the market. This is not fixed in value because fluctuations in the market generally affect the price of shares. A strategy most people like to use is to buy shares from a newly established company where the rates are at a minimum. If the company starts to gain its value in the market, shares dramatically shoots up leaving the investor happy with high capital gains.
The last term is the aggressive term. The term is used to describe the way an investor invests in high risk shares. The greater the number of shares you purchased, the higher the risks involved. This is mostly played by sophisticated investors.
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