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Popular stock market terms explained (part 2)

This is part two of the summary of City terms :-

Dow Jones

This is the name given to the main American equity stock market and is the index which you will see mentioned on all of the news bulletins and in the financial press. Again, like the FTSE100 it is an index of the largest companies in the US.


A share is basically a part of a company which is traded on the stock market. For example if a company had 100 shares in issue then a share would reflect a stake of 1% in the company. In reality there are literally hundreds of millions of shares issued by some companies.


A dividend is the payment per share which a company will make to its shareholders and is often a reflection of how well or badly the company is performing. There is no legal obligation to pay a dividend and some sectors such as technology may pay low or no dividends in order to retain funds for development and expansion plans.

The trend is your friend

This is a popular term amongst traders and reflects the fact that trends in share prices can often give a good indication of the future direction of the price - this can work on the upside and the downside!

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