Stock trading terms for beginners
Get help to learn stock trading terms
What is a long position?
A buy or long position is a term that describes when a trader buys a stock expecting that it will rise in price and then sell and take the profit.
What is a short position?
A sell or short position is a term that describes when a trader sells (shorts) a stock expecting that it will drop in price and then buy back at a lower price and take the profit.
What is leverage in trading?
Leverage is the practice of borrowing money from the stockbroker such as eToro to increase your investment or the number of stocks you buy or short, planning to increase your profits, but oppositely leverage increases your risk and amount you could lose by the same amount.
What are dividends in stocks?
Dividends are paid to stockholders as a way to reward and entice new investors, a company will share some of its earning determined by the board of directors and approved by shareholders through a cash dividend or a dividend of stocks. Dividends are paid yearly, quarterly, or monthly.
What is a catalyst in stocks?
A catalyst is an event or news that can drastically move the price of a stock up or down. Catalysts are especially used by day traders and other short-time traders but can be used by long-term investors to buy a stock at a lower price.
What is a support line in stocks?
A support line is a price that a stock hasn’t dropped below for a period of time, the support line or support price is created by traders buying the stock when it dips to that lower price, creating a price point that a stock struggles to drop below. You can analyze a support line by drawing a line along the lowest points over a period of time on a stock chart.
What is a resistance line in stocks?
A resistance line is a price that a stock hasn’t risen above for a period of time, the resistance line is created by traders selling or shorting the stock when it rises to that highest price creating a price point that a stock meets pressure to rise above. You can analyze a resistance line by drawing a line along the highest points over a period of time on a stock chart.
What is dollar-cost averaging in stocks?
Dollar-cost averaging is a stock trading strategy where a trader will divide up their total investment in a stock, by buying at different times to reduce the impact of volatility and to get an average price over time.