Rather than risk becoming confused, it is worth considering each of these terms one at a time. As a new trader, it pays to look into industry advice such as a professional Trade Nation Broker Review, and to arm yourself with all the terminology you can. Let’s break down some of the most common terms you will come across when reading up on trading:

Day Trading

This one should be nice and simple — it refers to trading during the day! However, what you may not know is that it also refers to completing transactions on the same day too. This is often a lucrative way of making money on your portfolio.

Initial Public Offering (IPO)

When a brand or business sets up an IPO, this means that they ‘go public’ with shares in their company. This is when everyday traders are able to buy small portions of these companies that they may be able to sell on at a profit. For the company, it is a quick and easy way to raise funds for ongoing development.

Averaging Down

When the average price of a stock goes down, some investors and traders may choose to buy it up. This is largely in the belief that the stock price will spike again in the future. It’s banking on the reputation of the stock reversing. Averaging down means you take advantage of a dip.

Leverage

Leverage can be complex, but many traders and investors swear by it. Leverage allows you to actively borrow from a broker. It’s much like borrowing and then paying back the loan when you make a profit. However, the risk is that there is never any guarantee of success.

Rally

Rallies, on the other hand, are generally always good to see. A rally is a spike or a sudden upturn in the value of a stock. For example, any rapid uptick of 15% could be considered a type of rally. Many traders ride these rallies for as long as they can.

Spread

Spreads can also be complex. The spread is, by and large, the difference between the sale price and the bid price for a specific stock. For example, if you put stock up for sale at £40, and your buyer offers £37, that’s a £3 spread.

Trading is fast becoming a common source of passive income for everyday people. You no longer have to be an FTSE guru to take full advantage. However, when the complexities of cryptocurrency trading loom into view, it can be easy to start feeling overwhelmed. Take your time and be sure to do your homework — trading success is certainly a marathon, not a sprint.