
Being a part of a trading company allows traders to benefit from its growth. However, many basic stock market terms, including arbitrage, bullish, IPO, margin, spread, etc., help beginners learn to trade. A financially strong trader encourages buying, while those uncertain do not know the basic terminologies sell their assets.
Traders can not become successful in trading without knowing these basic terms. It is pivotal to understand these basic principles to navigate the trade market smoothly. Let’s dive into the definitions of these stock terms.
Automated Trading
Automated trading is also named algorithm trading, which relates to trade execution using computer programs based on predefined criteria. It analyses the market condition, spot trading signals, and how human traders execute orders at unstoppable speed.
Automated trading focuses on regular investment depending on market conditions, eliminates emotional biases, and enables the traders to implement the strategies consistently. However, monitoring and testing are required to ensure their effectiveness.
Aussie
Aussie is one of the basic stock market terms generally used for the Australian dollar (AUD). In the global financial market, it is the prominent currency. Despite that, it is known for its association between commodity prices and liquidity. Aussies are sensitive to few economic indicators, so it is essential to monitor them regularly.
China is Australia’s primary partner in terms of trading and fluctuations in commodity prices. Traders must have deep knowledge of the factors influencing AUD to avail themselves of market opportunities.
Ask
The asking price is the offer price at which the seller aims to be part of an asset. However, the lower price represents a trader agreeing to pay for quote currency to buy one base unit. The asking price reflects transaction costs and market liquidity.
A narrower spread sometimes indicates more liquidity in the market. Markets with high liquidity allow traders to exit and enter positions in low amounts.
Arbitrage
It is a sophisticated trading technique that demands investment in discrepancies in the prices of the same financial assets on different platforms. In this case, traders buy assets for a minimal amount and sell them at relatively high prices to get risk-free profit.
Besides that, this practice involves swift access to various venues and executions to exploit opportunities. Arbitrage is crucial in improving market efficiency by reducing disparities and aligning prices.
Account
An account is a foundational platform where traders execute transactions, deposit funds, and monitor financial activities. A trading account is a personalised ledger that records all balances, positions, and trading operations. To venture in the stock market, creating a trade account is the first step for a beginner.
Furthermore, these accounts are categorised into various types, such as demo accounts, premium accounts, and standard accounts. Selecting one as per needs is appropriate as it aligns with a trader’s experience level, risk tolerance, and objective.