New investors are very excited to enter the market but have very limited knowledge about the same. Individuals are often confused with difficult jargon and concepts. Various multimedia channels use stock market terminology to explain the current market. It is beneficial for beginners to know them for easy understanding. Some individuals are not beginners but even they don’t know the fundamentals of stock market terminology in India. Here are a few terms that you must know before entering the world of stocks. 

What do you mean by the Stock Market?

It is a place where a company’s shares are exchanged. You can buy or sell shares here. Some rules and regulations are followed. SEBI regulates these rules and the working of the stock market. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the two major platforms in India where trading happens.

Need for Stock Market Terminology

The stock market uses industry-specific language at all times. It relates to the stock market. These terms are often used by experts in this field as well as amateurs to explain various aspects of this. Terms such as stock market patterns, trading strategies, indices, etc, are a part of this. Every person devoted to the stock market should be aware of these terms very well if you want to earn profits in this field. Stock markets demand this capability. It also helps a person to understand how the events that are taking place in our economy relate to the stock market.

Common terms that are very popular in the stock market are Bear Market and The Bull. Bull market is a condition in the stock market where stock prices are going up and the economy is doing well. When the stock market experiences a decline in the prices of the shares over a long period it is a Bear Market. Find more of these basic words in the stock market terminology pdf.

Terms

1. Agent: A brokerage firm is said to be an agent when it acts in place of its clients when they buy or sell shares. At no point during the whole deal will the agent own the shares.
2. Ask/Offer: This is the minimum price that the owner is ready to sell his or her stocks for. This is called an “ask.”
3. Assets: All the things that the company owns, like money and land and technology. This shows the total wealth of the company.
4. Bid: In this case, “bid” means the highest price a buyer is willing to give for an item of stock. In this case, you don’t ask or give.
5. Blue Chip Stocks: This is the thing you need to know about Blue Chip Stocks. These are stocks from big, long-standing, and economically sound companies that have been paying out dividends for a long time.
6. Bonds: It is a promissory note that is given to people by businesses or the government. It talks about how the buyer will keep a certain amount of money for a certain amount of time.
7. Book: A digital record of all the pending purchase and sales orders for a certain type of stock.
8. Broker/ Brokerage Firm: A securities firm that is registered as a broker/brokerage firm is called a broker or brokerage firm. Brokers are people who help people buy and sell stocks that are on the market. They don’t own the stocks at any point. But they charge for their service.
9. Call Option: An option that gives the investor the advantage but not the duty to buy a certain stock at a certain price in a certain amount of time.
10. Close Price: Close Price is the price at which the shares of a company are traded or sold at the end of a trading day.
11. Convertible Securities: These are securities like bonds, debentures, and preferred stocks, and that can be changed into different securities of the same company.
12. Debentures: They are a type of instrument which have a fixed income that is not backed by the collateral or physical assets of the person who gives them.
13. Defensive stocks: They make steady money and pay steady dividends, no matter what happens with the stock market. IT, FMCG, and Pharma are some of the most popular “safety” sectors, but they can be risky.
14. Face Value: The face value refers to how much money or how much cash the owner of security will get from its issuer at the maturity of the security at a certain date. It is the nominal value of the stock.
15. The Moving Average: It defines the average price of a single unit of a share over a certain amount of time
16. One-sided Market: It refers to a situation where people only want to sell or purchase stocks.
17. Volatility: Volatility means the changes in the price of a share. During trading sessions, very volatile stocks have a lot of rises and falls. These are very risky. They can make a lot of money for a good trader.
18. Volume: It explains the number of stocks that are traded at a certain time on an average basis. This is often the daily volume.
19. Dividend payback: It means what amount of money a firm or company pays in dividends each year as a percentage of the stock’s value.

Conclusion

People who know these stock market terminology will be able to understand the market better. But it is a lengthy process to learn all the words and retain them. Once you do that, these stock market words will be an important part of your daily trading.