Three stock broker terms you should know before investing in shares

Julie Brownlee, Fsp Invest, 24 Jul. 2015

Tags: investing in shares, stock broker terms, stock broker, liquidity, volume, market depth,

When investing in shares, it pays to know the key definitions stock brokers use to describe shares trading on the stock market.

So what are these stock broker words you should know about?

Read on to find out…

Stock broker term #1: Liquidity

When investing in shares, ideally you want to buy liquid shares.

When a share’s liquid it means there’s active buying and selling taking place. Under normal market conditions, you should easily be able to buy shares and sell shares.

On the other hand, if a share’s illiquid, the opposite is true. Illiquid shares don’t trade very much. And you may struggle to sell illiquid shares due to this.

If you decide to buy an illiquid share, your stock broker may point this out to you when you place your order.

Stock broker term #2: Volume

Volume is the quantity of shares that trade in a single day. You’ll be able to find the daily volumes for each share on the Johannesburg Stock Exchange online.

You may also be able to view the offer volume and the bid volume:

  • The offer volume is the number of shares investors offered to sell at a specific price.
  • The bid volume is the number of the shares investors offered to buy at a specific price.

Stock broker term #3: Market depth

Market depth describes the number and level of the bid prices and the offer prices on a particular share.

Most stock brokers quote the best five bids to buy a share and the best five offers to sell a share.

If you look at this online, your stock broker may list bids from the highest bid to the lowest bid. This includes the price of the bid, the numbers of shares bid at that price and the number of orders making up a particular level.

For example, if ten investors are each trying to buy 1,000 shares at 500c, you would see:

  • Bid volume: 10,000;
  • Orders: 10;
  • Bid price: 500c.

So there you have it. Three stock broker terms you should know before investing in shares

*********** Hot off the press ************

Did you know you're already in a position right now to make some serious money?

If you use this secret and get it right, it could really make you stinking rich.

I'm not promising you'll start making millions by next Saturday but it really could be your turn to rake in serious money (with far greater odds than buying a lottery ticket and crossing your fingers).

So click here to find out how you can take your financial future into your own hands!


Related QA

willz asked:
Good day I see the share price of Hulamin has dropped continuously since November 2017. Apparently it is a very good buy. Why does the price keep on [read more]
Published at 10 Feb. 2018 in: Shares & Stock Ideas Share price 1 Answer
BrianD asked:
Can you please advise me what is all required to get set-up for CFD trading? – as per the adverts from Timon? I note the quarterly fee, but what [read more]
Published at 13 Dec. 2017 in: Shares & Stock Ideas Cfd 1 Answer
DRTANYA asked:
I received shares form NETCARE in 2006 and forgot about it and now I am not sure if it is still available or valid anymore - who can I mail or [read more]
Published at 04 Dec. 2017 in: Shares & Stock Ideas 1 Answer
While I have been following Francois suggestions on the Red ?Hot Penny Shares since February this year, I am still not certain how long I am meant to [read more]
Published at 29 Aug. 2017 in: Shares & Stock Ideas Buy Sell Hold 2 answers
nmaranele asked:
Good day, What would be the right amount to invest as a minimum for equities to see tangible results? [read more]
Published at 18 Aug. 2017 in: Shares & Stock Ideas Minimum invetsment 1 Answer

Related articles: