Trading News for Beginners – Five Words Newcomers Should Learn

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In this article, you will learn about these five words that are often used in business news:

  • Assets
  • Volatility
  • bullish
  • Bearish
  • Rally

When used in the context of market news, certain words can act as catalysts, like the platinum converting gases in a catalytic converter. These words carry whole stories, meanings and background information that often move markets.

You’ll see these words over and over in market stories and, depending on the context, they send signals to traders and investors about market conditions. Sometimes the signals are loud enough to change a feeling.

Assets

the word assets is a hot button in the financial news, and it shows up in stories whether the market is up or down. When market conditions are normal and investor confidence is strong, risky assets such as stocks, currencies and real estate tend to become favorites because their potential returns are perceived to be higher than traditional risky assets such as fixed-income bonds. As you can see, risk and risk assets are umbrella terms that cover a range of individual instruments.

Assets come in all shapes and sizes and even take different states to become underlying. When an asset that is offered on a public exchange becomes an underlying, it becomes part of a contract known as a financial instrument. The most common currency instrument is the Contract for Difference (CFD). CFDs are traded on underlying assets such as currency pairs and as equity investment becomes increasingly available through online brokers such as Admirals, CFDs are also traded on stocks.

When an asset underlies a CFD, the trader or investor does not own the asset itself. Instead, a positive or negative return is made on the difference in the opening and closing prices of the asset during a given period.

Volatility

Volatility is another word to watch out for in the news. It describes unusually sharp rises or falls in the price of an asset, a market sector or an entire stock market. Volatility normally indicates a riskier market environment and trading in these conditions requires a good level of expertise. When the word volatility starts appearing in the market news, it’s time to evaluate your strategy and check that careful risk management is in place.

bullish

If you had a dollar for every time the word bull is used in a market story, you wouldn’t need to trade and invest at all because it’s a daily occurrence when the economy booms, and your bank account would be full! Bullish trends indicate that the price of an asset is rising, and that confidence is strong in the business markets. The term is often used in the commodity and currency markets as well as to describe optimism in the stock markets.

Bearish

What goes up must come down, as the old saying goes. A bullish trend can quickly turn into a bearish trend, in other words, a market downturn in which the price of an asset, sector or market falls rapidly as traders and investors sell riskier assets. This can happen during an economic recession or as a result of negative sentiment due to geopolitical factors.

Rally

Here let’s take the opposite sentence: what goes down must go up. Each dip reaches its lowest point, and the market turns. If it turns sharply upward and market sentiment supports the rising trend, it is called a rally. A rally refers to a previous decline and indicates that investors and traders have revived their buying interest and regained their confidence.

That wraps up our overview of some commonly used words in business news, remember that the news can affect the markets and it is worth staying up to date and researching your trades in the context of the latest news in the financial media.

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This material does not contain and should not be considered as containing investment advice, investment recommendations, an offer or solicitation for any transactions in financial instruments. Please note that such business analysis is not a reliable indicator of any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks involved.

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