Wall Street Jargon: Basics

Since I will be using Wall Street jargon from here on out, it’s important you know their meanings and how they are used. I will now go over a few basic investment terms, and will discuss the more advanced terms at a later time.

• Security: refers to a type of investment. Since stocks aren’t the only securities available to trade, this term is used to describe all types of investments. This includes Mutual Funds, Options, and ETF’s, all of which will be covered later.
• Bid: is the highest price a buyer is willing to pay for a security.
• Ask: is the lowest price a seller is willing to receive for their security. The Ask is almost always higher than the Bid.
• Size: is the number of shares on the Bid or Ask and is represented as a number of Lots, rather than number of shares. Each Lot is for 100 shares, so 5 lots would equal 500 shares.
• Volume: refers to the stocks demand, both buying and selling, and displays the number of shares that have traded for that day. A stock with high volume means there are a lot of active traders, and a stock with low volume means the opposite. Thus the higher the volume, the more volatile the stock is.
• Volatility: refers the stock’s fluctuating price. When a stock is very volatile, which is usually due to high volume or higher-than-normal volume, its price tends to move up and down drastically.
• Execution: refers to an order being completed. Another word for this is “filled,” as in your order has been filled.
• Open Order: is an order that has not yet executed.
• Completed Order: is an order that has already executed.

So far these are the most basic investment terms you should know. I will be adding more terms later in case I skipped any. You may want to bookmark this particular post that way you can revisit it anytime without having to dig through the blog archive. I will finally begin discussing order types in my next post, so stay tuned.