In order to learn the long and short of investment market, most of the new investors have to learn what looks like a new language. There are certain important terms which are used in derivative, future, equity and forex markets. Beginners must understand these terms and the way they are used by the investors interchangeably. By understanding these terms, you can easily realize and speak with the other market members. By proper communication, you will be able to make wise investment decisions. Following is the description about those basic market terms:

1. The Long And Short Of It:

When you own something and the value of that particular thing will be expected to rise in future is known as the long and short of it. When you want to lock out that thing you would sell it.

Shorting on the other hand means the selling of the stock you do not own. Speculators are allowed by the brokerage firms to borrow the shares for the purpose of selling them in the open market, but with the obligation of ultimately returning the same. Investors sell these shares at the day price with the hope of purchasing them again at a lower price. Difference will be pocketed by them.

2. The Currency Caveat:

You are longing one currency and shorting the other when you are dealing in the spot market. This is for the reason that you are replacing one currency for another and the several currencies of the world trade in pairs.

3. Sentiment Speak:

Some other terms which are new for the beginners are bullish and bearish. Both of these terms express the feeling of a person regarding the market conditions. Bullish means that the market will raise while bearish means that it will go down.Generally, investors use the terms long and short instead of using the terms bullish and bearish. So despite of saying that they are bullish on the market they say that they are long on the market, and in spite of saying bearish they may use short on the market.

4. Derivative Dialects:

Derivative market is also called option market. Options are the contracts of buying and selling the securities at set prices and at set times. Options usually include calls and puts. Call options allow the contract buyers to buy the shares at the contract price on or earlier than the set date. On the other hand, a put option permits the buyer to sell shares before the set date at the set price.

Investors use certain other terms like wrote a contract along with the other terms. Buying of a stock and selling of a call contract simultaneously is known as covered call. The purchased stock acts as a security if the call is put into effect by the option buyer. On the other hand, seller can give up the shares and keep the premium obtained with him.

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