Let's be honest; stock market terminology can be confusing. Not everyone gets what Bulls & Bears do inside the US Stock market! While overlapping terms are often used in the Indian and US markets, it is still essential to review the fundamentals. We've covered common terms used in the US stock market to help you jump-start your long-term foreign investments journey and formulate a diversification plan.
Mastering US Stock Market Terminology
Before you start shortlisting the best long-term US stocks, you should add these terms to your trading vocabulary:
- ADR- An American Depository Receipt is a receipt issued by the depository bank against the shares of a foreign company. ADRs trade on the US stock market like regular US company stocks.
- Bearish/Bullish Market - A bull market is when investors expect a price rise and the market is experiencing a general upward trend. A bear market is a prolonged downward trend, with stock prices falling.
- Beta - Beta is a measure of a stock’s risk vis-a-vis the market. A higher beta value means riskier investments.
- Bid-Ask Spread - It is the difference between the price investors are willing to pay for an asset and the asking price of a stock.
- Blue-Chip Stock - Stocks of prominent companies with large market caps and a proven history of strong financials and good returns are termed blue-chip stocks.
- DJIA - The Dow Jones Industrial Average, or Dow 30, is a leading US stock market index that tracks the performance of the top 30 large-cap stocks.
- Fractional Share Ownership - Instead of owning the whole share, investors can own portions of it, paying in proportion to their partial ownership.
- Going Long -When investors buy US stocks expecting a price rise and future profits.
- Going Short - When investors sell stocks anticipating price fall soon. While going short, the investor borrows the security from the market and sells it at a high price. They can repurchase the stock at a lower price later and close the position, recording a profit.
- LRS - Liberalised Remittance Scheme is an RBI mandate that allows Indian investors to remit up to $250,000 per year for investments in the United States share market.
- Market Index - A stock market index tracks the performance of certain stocks and securities. As performance indicators, indices measure the market sentiment of a specific subset or the overall market.
- Margin - Margin accounts let investors borrow money from brokers to buy stocks. However, margin trading is not open to Indian investors investing in the US stock market.
- Moving Average - Used in stock analysis charts, the moving average is a technical indicator used by traders to gauge the average price of stocks and securities over a period of time. Stock price trends are commonly assessed with 50-day and 200-day moving averages.
- NASDAQ - Acronym for the National Association of Securities Dealers Automated Quotations, NASDAQ is the world’s first electronic stock exchange.
- NYSE - The New York Stock Exchange is the world’s largest equities-based stock exchange in terms of the market cap of traded securities.
- Penny Stock - Penny stocks are shares from small companies that trade for less than $5.
- OTC Stocks - Over-the-counter stocks are not listed on any major US stock exchange. Most penny stocks are OTC stocks.
- Yield - The percentage return you derive from a stock over a period of time is termed yield.
Learned the Lingo? Now Start Investing
US stock market terms might seem daunting, but with this easy cheat sheet, you're all set! If you wish to simplify your US stock market investments further, download the Fi Money app.
Whether you want to invest in the best long-term US stocks or look at short-term options, you can get all the help you need on your investment journey with the Fi app's Curated Collections and in-app explainers.
Frequently Asked Questions
1.What are important terms in the stock market?
Portfolio, bid, ask, market order, bearish and bullish market, dividend, and broker are some of the most important terms in any stock market.
2.What are the 7 basic common stock categories?
Basic stock categories are:
- Growth stocks
- Speculative stocks
- Penny stocks
- Defensive stocks
- Value stocks
- Cyclical stocks
- Income stocks
What is US 30 in stocks?
US 30, or the Dow Jones Industrial Average, is a stock market index comprising 30 large, influential companies in the United States. It serves as a benchmark for assessing the overall market performance. Investors track the US 30 index to gain insights into the health and direction of the US stock market.
What are the 3 US stock markets?
The three primary stock markets in the United States are the New York Stock Exchange (NYSE), NASDAQ and the Chicago Stock Exchange (CHX)
Learn more about US Stocks here: https://www.youtube.com/shorts/VywxVwa-9nM