What is STOCK MARKET ?
The stock market is a marketplace where traders buy and sell equity shares of companies. The person who buys stocks/shares is called a buyer and the one who sells his stocks is called a seller.
The Bombay Stock Exchange (BSE) and The National Stock exchange (NSE) are the major platforms where most of the stock trading happens in India.
What are Stock terminologies?
Stock terminologies are industry-specific jargon which are frequently used in the stock market. These terms are used by everyone who deals with stocks.
Here are the basic terms you should know :-
SELL — Selling of shares you own to book profit or cut-down losses.
BULL — When there is a positive percentage rise in the national Index than it is called the bull market. In layperson terms, a steady increase in overall stock prices is called a bull market. Also known as Bull run.
BEAR — When there is a negative percentage fall in the national Index than it is called the bear market. In layperson terms, a steady fall in overall stock prices is called a bear market. Also known as Bearish.
LIMIT ORDER — The type of order which executes at a particular price set by the trader. Ex: The price of X stock is Rs.100 but you want to buy at Rs.95. So, you put a limit order of Rs.95.
MARKET ORDER — The type of order which is executed at the market price of a certain share/stock. Ex: if the price of the stock is Rs.100 then it buys the stock at that price itself.
VOLATILITY — Fluctuation of the stock prices into ups and down in the form of a chart. Traders should take volatility into consideration while making a trade.
BLUE-CHIP STOCKS — The stocks that have a market capitalization of more than around 20k crores (Indian markets).
DIVIDEND — It is the extra money given to the shareholders if the stock has gained enough profit in the financial quarter, a point to note for example if we get Rs.100 dividend per stock then the price of that stock decreases by Rs.100 at the day when the dividend is disbursed to the shareholders.
IPO — IPO stands Initial Public Offering. This happens when a company decides to become a publicly-traded company.
P/E VALUE — It is the ratio of the current share price by earning per share (EPS).
PEG RATIO: Ratio of current share price to the EPS growth yearly.
EARNING PER SHARE — It is the ratio of (profit(company profit) — dividend) to the (total no. of shares, the shareholders have).
BROKER– A person who buys or sells stock on your behalf in return of small commission.
AVERAGING DOWN — This is the point at which an investor buys the stock as its price goes down in order to increase the cost at which bought.
PORTFOLIO — Collection of investments owned by an investor.
LONG TERM — Buying a stock at a low price and keeping it for years to sell them at appropriate time.
PENNY STOCKS — Stocks that are traded at a very low price and have low market capitalization. In India, it is generally traded at Rs 0.01 to 10 per share.
It takes a good amount of time to learn these basic terminologies and as you progress in your investment journey these basic stock market terminologies will be a part of your daily vocabulary. Check out our other blogs for a detailed explanation on these topics.
