The intermittent decreases in the value of global stocks which has been seen in earlier years have come with a lot of specialized financial terms that the greater part of us are not familiar with. This has required most stock market investors to take a refresher exercise on the most significant of them. You most likely fail to trade successfully in the unstable worldwide market if these terms are not known to you.
A term that has gained widest popularity in the near past has been the term correction. It may seem to imply a common notion but knowing its true meaning can save you a fortune by informing your trading decision. This generally happens when a specific resource like a stock decreases in market value by at least 10% from a recent high net worth. It is, notwithstanding, imperative to take note that this term suggests a drop in the value of an asset like a stock, commodity or a bond.
It is almost by default that anybody in the stock trading business has heard of the term market close. Before officially declaring that an asset has entered a correction, it is the norm for investors to wait until the market closes. During bull markets, it is a common phenomenon for corrections to occur. There is also a possibility for the market to go a long time without a correction. The term bull market in the business sector more often than not alludes to an ascent in stock value by 20% or more. Following the steep fall in the price of most stocks, the market has seen a continuous recovery that can be traced back to 2009.
A bear market occurs when the value of stocks fall by twenty percent or more for a given period which is at least two months. Most of the time, sell-offs in a given market will impact sell-offs in another market or economy. This phenomenon is known as a contagion since market disturbances are constantly spreading from region to region. An example of contagion is when the sell-offs in one economy, like America, impacts sell-offs in other different economies like Asia.
Being a fairly new term, algorithmic trading has seen a rise in its use among stock traders. The general meaning of an algorithm is a series of codes that dictate the steps in the performance of an action by a computer. In the case of the stock exchange market, the algorithms being referred to are utilized to enable modified computers to place stock trades at surprisingly high speeds. These algorithms enable the computer to perform the tasks without suffering fatigue or boredom and at a faster speed than any one human being. Algorithm trading immensely affects the market as it sets the upper limit speed for trading in most stock markets.
There are various other financial terms that will be worth learning however these will go a long way in helping you understand the market. It is highly recommended that you keep adapting new financial terms if you desire to make successful trades in the volatile global market.