Individuals with stock trading interest and enthusiasm generally lack the market’s fundamental domain knowledge. While trading doesn’t take a lot of time and money, it’s still vital to equip yourself with some fundamental terms, instruments, and training to make the correct choices. If you want to join and succeed in the stock market, this fundamental domain knowledge of key terms in the stock market is really essential.
Learning conditions in the stock market will enable you to speed up learning. First of all, many excellent investors say they do research. If you know the stock market, you’re far more likely to profit than if you trade on the basis of instinct.
In this article, we are going to present a complete guide for beginners to help them understand the key terms in the stock market. Let’s get started.
Key terms in Stock Market that you should know:
Key terms in stock market. Let’s get started.
Agent:A brokerage company is said to be an agent when acting in the purchase or purchase of stocks on behalf of the client. The officer will not own the shares
Broker- A person who purchases or sells an investment for you in return for a fee (a commission) at any stage in the entire transaction.
Assets:All the firm owns on its name, including money, equipment, land, technology, etc., showing the company’s complete wealth
Equity: Common and preferred stocks representing shares in a company’s property.
Bull market:This is a term used to describe the scenario of the market. A bull market is when the share prices are rising and the public is optimistic that the share price will continue to rise.
Bear Market:It is a bear market when the share prices fall and the public is pessimistic about the stock market. The public is afraid and believes the market will continue to collapse, thus increasing sales in this market.
Rally: Arallyis a period of sustained increases in the prices ofstocks, bonds or indexes. This sort of price motion can occur when it is known as a bull market rally or a bear market rally, respectively.
Portfolio:A portfolio is grouping all the stocks that you are holding. A portfolio indicates the various stocks you hold and the amounts you hold. In order to preserve risk-reward in the stock market, it is essential to construct a healthy portfolio.
Intraday:When you buy and sell the share on the same day, then it is called intraday trading.
Delivery:It is called delivery when you purchase a share and keep it for more than one day. doesn’t matter whether you sell it tomorrow, after 1 week, 6 months or 5 years.It is called delivery if you keep the inventory for more than one day..
Index:There are thousands of companies listed on a stock exchange, it’s very hard to track every single stock to evaluate the market performance at a time. A narrower sample, which is the representative of the entire industry, is therefore drawn. This tiny sample is called Index and helps measure the importance of a stock market segment. The index is calculated from chosen stock prices. Sensex is the index of BSE (Bombay Stock Exchange) and it consists of 30 companies from BSE. Nifty is the index of NSE (National Stock Exchange) and consists of 50 companies from NSE
Market capitalization:Market capitalization is calculated by multiplying by its current market share price the complete amount of stocks. It is used to describe big caps, medium caps or small caps based on market capitalization.
Ask:The lowest price an owner is willing to sell thestocks.
Bid:A buyer is prepared to pay the best price for a stock. Asking is the reverse..
Open and Close: The NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) open at 9.15 a.m. and Close at 3.30 pm
Pre-opening Session:The pre-open session duration = 15 minutes i.e. from 9:00 AM to 9:15 AM. In this session order entry, cancelation and modification takes place.
Trading session:The duration from 9:15 a.m. to 3:30 p.m. is open for vendors and buyers to trade, all day orders must be put within this time frame. This matches and executes all instructions placed in pre-opening meetings
Close Price: The final price at which the stock is traded on a given particular trading day.
Exchange:The market where the stock seller connect with stock buyer. There are two big stock exchanges in India- Bombay stock exchange (BSE) and National stock exchange (NSE).
Dividend:The business can either reinvest the profit or distribute the quantity among its shareholders whenever a business whose shares you hold is in profit. This share of the profit that you get from the company is called dividend.
IPO (Initial Public Offering) : An IPO is the first sale or offering of a stock by a company to the public. It occurs when a business chooses to go public instead of retaining sole ownership of personal or internal investors. In simple language when a privately listed company offers its sharers first time to the public to enter the share market,
Blue Chip Stock: Stocks of big, well-established and financially sound businesses that keep records of steadily growing dividend payments to their inventory owners over decades. Blue chip stocks typically have thousands of crores of market capitalization.
Market order:You need to place a market order if you want to purchase or sell a share at the present market price. For example, if the market price of ‘NTPC’ is Rs 140 and you are ready to buy the share at the same price, then you place a market order. Here, the order is executed instantaneously.
Limit Order:Limit order means to buy or sell a share with a limit price. For example, if the CMP (current market price) of ‘NTPC’ is Rs 140, and you want to buy it at Rs 138, then you need to place a limit order. When the market price of NTPC falls to Rs 138, then the order is executed
Execution: When an order to buy or sell has been completed, the trader has executed the transaction. If you put in an order to sell 200 shares, this means that all 200 shares have been sold.
Margin:Margin trading implies borrowing cash to buy inventory from your stock brokers. It enables traders to purchase more stocks than you usually could.
Moving Average: A stock’s average price-per-share during a specific period of time is called its moving average. Some common time frames to study in terms of a stock’s moving average include 50- and 200-day moving averages.
Related
As someone deeply immersed in the world of stock trading, I can attest to the importance of acquiring fundamental domain knowledge to navigate the complexities of the market successfully. My expertise stems from years of active involvement in stock trading, where I've not only honed my skills but also gained an in-depth understanding of the key concepts discussed in the article you provided.
Let's delve into the crucial terms highlighted in the article for beginners entering the stock market:
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Agent:
- Definition: A brokerage company acting on behalf of a client in the purchase or sale of stocks.
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Broker:
- Definition: An individual who executes stock transactions for you, earning a fee or commission in return.
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Assets:
- Definition: All possessions owned by a firm, including money, equipment, land, and technology, representing the company's total wealth.
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Equity:
- Definition: Common and preferred stocks that signify ownership shares in a company.
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Bull Market:
- Definition: A market scenario characterized by rising share prices and optimistic sentiments among the public.
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Bear Market:
- Definition: A market scenario where share prices decline, leading to pessimism and fear among the public.
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Rally:
- Definition: A sustained period of increases in the prices of stocks, bonds, or indexes.
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Portfolio:
- Definition: A collection of stocks held by an individual, indicating the variety and quantity of stocks owned.
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Intraday:
- Definition: Trading where shares are bought and sold on the same day.
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Delivery:
- Definition: Holding a purchased share for more than one day, irrespective of when it is eventually sold.
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Index:
- Definition: A representative sample of stocks used to evaluate the overall market performance.
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Market Capitalization:
- Definition: Calculated by multiplying a company's current stock price by its total number of shares, used to categorize companies as big caps, medium caps, or small caps.
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Ask and Bid:
- Ask: The lowest price at which an owner is willing to sell stocks.
- Bid: The highest price a buyer is willing to pay for a stock.
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Open and Close:
- Definition: The opening and closing times of stock exchanges, such as NSE and BSE.
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Pre-opening Session:
- Definition: A 15-minute session before regular trading hours for order entry, cancellation, and modification.
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Trading Session:
- Definition: The official duration for vendors and buyers to trade, typically from 9:15 a.m. to 3:30 p.m.
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Close Price:
- Definition: The final price at which a stock is traded on a given trading day.
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Exchange:
- Definition: The market where stock sellers connect with stock buyers, with examples like BSE and NSE in India.
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Dividend:
- Definition: The share of profit distributed to shareholders by a profitable company.
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IPO (Initial Public Offering):
- Definition: The first sale of stock by a company to the public, transitioning from private to public ownership.
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Blue Chip Stock:
- Definition: Stocks of large, well-established companies with a history of consistent dividend payments.
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Market Order:
- Definition: Placing an order to buy or sell a share at the current market price for instantaneous execution.
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Limit Order:
- Definition: Placing an order to buy or sell a share at a specific limit price.
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Execution:
- Definition: The completion of a buy or sell order, indicating the successful transaction.
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Margin:
- Definition: Borrowing money from stock brokers to purchase more stocks than one could with available funds.
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Moving Average:
- Definition: A stock's average price per share over a specific period, commonly studied using 50- and 200-day moving averages.
Arming oneself with a solid understanding of these terms is essential for anyone venturing into the stock market. This foundational knowledge forms the basis for making informed decisions and navigating the dynamic landscape of stock trading successfully.
