The stock market is the best way one could grow his or her money. But if you are a beginner and want to dive into the sea of stocks and shares and all. You should be knowing some of the common stock market terms. Below are the 40 common stock market terms every beginner should know.
40 Very Common Stock Market Terms For Beginners
1. Stock Or Share
Stocks or shares represent the proportion of the company’s ownership.
2. Bull Market
Bullish or Bull Market represents the situation where the market performs well that is stock prices go high. This indicates the positive growth of the stock market.
3. Bear Market
Bearish Or Bear Market represents the situation where the market underperforms or stock prices expected to go down. It indicates the negative growth of the stock market.
4. Initial Public Offering (IPO)
Initial Public Offering is a process where a private limited company listed their stocks at the stock exchange so that common people trade them.
A broker is a person or a firm through which we buy or sell stocks(trading).
A portfolio is basically the collection of different stocks owned by an investor.
7. Stock Exchange
Stock Exchange or commonly known as the stock market is a place where all that buying selling of stocks or trading happens. Bombay Stock Exchange(BSE) and National Stock Exchange(NSE) are the major stock exchange in India.
8. Ask Price
Ask price is the highest price investor or seller wants in order to sell their existing stocks.
9. Bid Price
Bid price on the other hand is the price buyer willing to give to buy the given stock.
10. Bid- Ask Spread
The Difference between Bid Price and Ask Price is known as Bid-Ask Spread.
11. Opening Price
The price of the stock when the share market opens at 9:15 am in the morning is known as the opening price.
12. Closing Price
The price of the share at the closing time of the market at 3:30 pm is known as the closing price.
The highest traded price of the given stock on that particular day is known as high.
The lowest traded price for any given stocks on that particular day is known as low.
15. Previous High
The highest traded price for a stock on the previous day is known as the previous high.
16. Previous Low
The lowest traded price for a stock on the previous day is called as the previous low.
17. Intraday Trade
It’s a trade that opens and closes on the same day. Whenever we buy stocks and sell it on the same day, its called Intraday Trade.
Suppose we want to buy shares worth rupees 50000 but we only have 30000 to invest. In this case, our broker lends some to use to make investment and this borrowed money from a broker is known as Margin. Every brokerage firm has its own margins. We have to have a margin account to avail of the margin.
Dividends are the returns on investments. Basically it’s an amount company pays to its shareholder as a token of appreciation.
20. Dividend Yield
Dividend Yield is the ratio of the price of the dividend to the price of the share.
21. Bonus Share
During a long term investment in any stocks, the company gives some of its stocks for free, and this is called Bonus Share.
22. Stock Index
In stock market index refers to a tool that measures the change in the stock market.
23. Squaring Off
When we buy stock and want to sell the stock on the same day (intraday), this process is called squaring off.
Rally is defined as a continuous increase in the price of the stock. When a stock’s price increase continuously for a given period of time it is known to be showing rally.
When due to any unwanted circumstances the price of any asset or stock fall suddenly is called crash or crashing of the stock market.
26. Market Capitalization
Market Capitalization refers to the total value of the company or it is the total value of the stocks of a given company.
It is calculated by the total numbers of shares multiplied by the price of the share.
27. Last Trade Price (LTP)
As its name suggest LTP is the price of the last trade of a given stock.
28. Current Market Price (CMP)
The ongoing price or the current price of the stock’s in the market is known as the Current Market Price.
29. Delivery Trading
Delivery trading is a method of trading where we buy shares and sell them on any day except on the same day.
A promoter is a person who starts the company. The promoter or founder is the original shareholder of the company.
31. Market Order
It is an order where you want to buy or sell a stock immediately.
32. Limit Order
When you decide a fixed limit of price to buy and sell your stock, it is called a limit order.
33. Day Order
A day order is defined as the buying or selling order of the stock which is valid of that day only.
When the order of buying or selling of securities is completed, it is called execution.
35. Face Value
Face value or face price is the amount of the share decided by the promoter(founder) initially.
36. Going Long
When investor or trader is sure enough that stock price will go high then this is called going long. It means positive outcomes of the stock market.
37. Going Short
On the contrary, when investors thought that the price of a certain stock might decrease or fall, this is called going short. It means negative outcomes of the stock market.
Liquidity is defined as the ease with which we can buy or sell stocks to convert them into cash.
39. Blue Ship Stocks
These are the shares of a large renowned and established company which is in the market for a long time.
40. Pink Sheet Stocks
Pink sheet stocks are the stocks that aren’t listed on the major stock exchange like BSE AND NSE.