If you’re new to the stock market, the stock market can feel like a foreign country and there are a lot of terms that you may not be familiar with. In this blog post, we’ll define some of the most common stock market terms, so you can feel more confident when making trades.
Stock Market Terms for Beginners
#1 Share: When a company divides its capital into small parts, then the smallest piece which cannot have more parts is called Share.
#2 Dividend: Whenever a company has an additional profit, it distributes a part of that profit to its shareholders, which is called a Dividend.
#3 Bonus Share: Many times after the company is profitable, it does not issue Dividends but instead distributes some of the share shares of the company to the holders, in addition to dividends, the Extra Share shares which are distributed among the holders are called Bonus Share.
#4 Stock Split: When a company breaks its share and divides it into several parts, it is called Stock Split. For example, suppose there is a stock that is worth 100 rupees, and the company that owns the stock is divided into 4 parts. Breaking it into 4 shares of Rs. 25 each, this is called a stock split.
#5 Bid Price: Bid price is the price of a share at which any Buyer is ready to buy that share.
#6 Ask Price: Ask Price is the price of a share at which any Seller is ready to sell that share.
#7 Spread: Spread is the difference between Bid Price and Ask Price.
#8 Stop loss: Stop loss is the price point of a share where a trader or investor is sitting ready to exit the stock after booking his loss. StopLoss is applied to control loss in the stock market.
#9 Target: Target is the price point of a stock where a trader or investor is sitting ready to exit from the share by booking their profit.
#10 Volume: The volume of a company’s stock is bought and sold in a given time interval in 1 day, 1 month, 1 year, and it is called Volume.
#11 Volatile: Measure the movement that happens in the price of shares by volatility, if the price of the stock has a low movement then the market is less volatile and if there is more movement in the price of the stock then the market is more volatile.
#12 Buy / Long: When we buy a stock in the stock market, it is called Buy or Long.
#13 Sell / Short: When we sell a stock in a stock market, it is called Sell or Short.
#14 Bull: When people are optimistic about the market and the price increase of stocks is happening, then it is called Bull Market.
#15 Bear: When people are pessimistic about the market and the price of stocks is falling, then it is called a Bear Market.
#16 Broker: The broker works to combine Buyers and Sellers, using Broker’s platform, the buyer can buy the stocks and the seller can sell the stocks.
#17 Stock Exchange: Stock Exchange is where all companies are listed. All stockbrokers are members of the Stock Exchange.
#18 Trading Account: Trading Account is required to Buy and Sell Stocks. A trading account is opened with a broker.
#19 Demat Account: A Demate Account is necessary to keep the Shares purchased, a Demat Account is opened with a broker.
# 20 SEBI (Securities and Exchange Board of India): SEBI is a government body that regulates the stock market.
#21 RBI (Reserve Bank of India): RBI regulates the banking system.
#22 NSE (National Stock Exchange): NSE is the largest stock exchange in India where companies are listed.
#23 BSE (Bombay Stock Exchange): BSE is the second-largest stock exchange in India where companies are listed.
#24 Nifty: Nifty is a group of 50 companies. It is the main index of NSE.
#25 Sensex: SENSEX is a group of 30 companies, it is the main index of BSE.
#26 Trading: Buying and selling Shares in a short time interval is called Trading. On the other hand, trading is done by people who are thinking of making quick money.
#27 Margin: Margin is a type of lending that a stockbroker provides. Shares are bought and sold using Margin.
#28 Scalping Trading: Scalping Trading is a purchase by selling stock from a few seconds to a few minutes.
#29 Intraday Trading: Intraday trading is the purchase of stock and selling it within a day or before the market closes.
#30 BTST (Buy Today Sell Tomorrow) Trading: Buying a stock today and selling it tomorrow is called BTST.
#31 Swing Trading: Swing trading by buying a stock today and selling it within a week to a month or two months is called swing trading.
#32 Positional Trading: In Position Trading, a share is sold within a few months to 1 year, which is called Positional Trading.
#33 Indicator: There are many programs or software in the market called Indicator to understand the price movement of shares.
#34 Investing: Investing is to keep a share for a longer period of 1 year and sell it when there is a good profit.
#35 Mutual Fund: Mutual fund is a fund in which a lot of people put money in little by little and an Expert who has an understanding of the market invests that money in the stock market.
#36 Share Market: A share market is a market where companies raise money by selling their shares where the shares of companies are bought and sold.
#37 Stock Market: When we are talking about the stock market, we are not only talking about Equity but also Bonds, Debenture, Mutual Fund, Forex, Commodity, Derivatives, and Shares all included in the stock market.
#38 Forex Market: Forex Market is a market where currency such as Rupees, Dollars, Pounds, and Euros are bought and sold.
#39 Commodity Market: The commodity market is the market where commodities like Gold, Silver, Crudeoil, etc. are bought and sold.
#40 Market Cap: The total price of a company is called the market cap, its calculation is calculated by multiplying the total number of shares in the share price.
#41 Large Cap / Blue Chip: The 100 largest companies in the Indian stock market are called Largecap or Blue Chip Company. Companies whose market cap is more than 20000 crores are large-cap companies.
#42 Mid Cap: The company from number 101 to number 500 in the Indian stock market is called Midcap Company. Companies that have a market cap between Rs 5000 crore and Rs 20000 crore are Midcap companies.
#43 Small-Cap: Every company from the number 501 company in the Indian stock market to the next is called Small Cap or Micro-Cap company. Companies whose market cap is less than 5000 crores are Smallcap or Microcap companies.
#44 Insider Trading: Finding information inside a company and doing trading is called Insider Trading, it is illegal to do it.
#45 Arbitrage: Many shares are listed on more than one stock exchange and sometimes there is a huge difference in their price which trading by taking advantage of it is called arbitrage.
#46 IPO (Initial Public Offering): When a company issues its shares in the stock market for the first time, the process is called IPO.
#47 Bonds: When a company or government borrows money directly from the general public, then bonds are given in exchange for it. Bonds are like a receipt that states how much money we have borrowed from you and on which date The money will be repaid with full interest.
#48 Debenture: Debentures are also like bonds, in which money is raised from the market, but it is not as secure as bonds.
#49 Portfolio: The collection of all the Shares and Mutual Funds that you have purchased is called a Portfolio.
#50 Multibagger: Whenever a stock makes a very good profit and that stock multiplies the money very much, then that profit is called Multibagger Return.
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