Stock market terms are industry-specific jargon for the market. once consultants and amateurs refer trading stocks, they use these securities market terms to talk specifically about strategies, charts, patterns, indices, and different parts of the stock trading business.
Learning stock market terms will allow you to accelerate the learning process.
Understanding the securities market is a frightening task for any new investor. But you will learn it bit by bit by following any beginners guide for share market.
Not only are there several ideas and technical terms to decipher, however nearly everyone can attempt to provide you with conflicting items of recommendation.
Some stock market terms — such as bull and bear, which I’ll cover below also apply to other investment vehicles, such as real estate. I’m only going to cover their relationship to stocks
1. Annual Report
An annual report is a report prepared by a company that’s intended to impress shareholders. It contains tons of information about the company, from its cash flow to its management strategy. When you read an annual report, you’re judging the company’s solvency and financial situation.
2. Bear Market
Trading talk for the stock market being in a downward trend, or a period of falling stock prices. This is the opposite of a bull market.
3. Blue Chip Stocks
The stocks behind large, industry-leading companies. They offer a stable record of significant dividend payments and have a reputation of sound fiscal management. The expression is thought to have been derived from blue gambling chips, which is the highest denomination of chips used in casinos.
4. Bull Market
When the stock market as a whole is in a prolonged period of increasing stock prices. It’s the opposite of a bear market. A single stock can be bullish or bearish too, as can a sector, which I’ll describe later on.
A person who buys or sells an investment for you in exchange for a fee (a commission).
The bid is the amount of money a trader is willing to pay per share for a given stock. It’s balanced against the ask price, which is what a seller wants per share of that same stock, and the spread is the difference between those two prices.
7. Day Trading
The practice of buying and selling within the same trading day, before the close of the markets on that day, is called day trading. This is my primary trading strategy, although I have a long-term portfolio, as well. Traders who participate in day trading are often called “active traders” or “day traders.”
A portion of a company’s earnings that is paid to shareholders, or people that own that company’s stock, on a quarterly or annual basis. Not all companies pay dividends. For instance, if you trade penny stocks, you’re likely not after dividends.
9. Initial Public Offering (IPO)
An IPO is the first sale or offering of a stock by a company to the public. It happens when a company decides to go public rather than remain solely owned by private or inside investors.
A margin account lets a person borrow money (take out a loan, essentially) from a broker to purchase an investment. The difference between the amount of the loan and the price of the securities is called the margin.
Trading on margin can be dangerous because, if you’re wrong about the direction in which the stock will go, you can lose significant cash. You must often maintain a minimum balance in a margin account.
12. 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.
A collection of investments owned by an investor makes up his or her portfolio. You can have as few as one stock in a portfolio, but you can also own an infinite amount of stocks or other securities.
The price movements of a stock or the stock market as a whole. Highly volatile stocks are those with extreme daily up and down movements and wide intraday trading ranges. This is often common with stocks that are thinly traded or have low trading volumes.
The number of shares of stock traded during a particular time period, normally measured in average daily trading volume. Volume can also mean the number of shares you purchase of a given stock. For instance, buying 2,000 shares of a company is a higher-volume purchase than buying 20 shares.
Often refers to the measure of the return on an investment that is received from the payment of a dividend. This is determined by dividing the annual dividend amount by the price paid for the stock.
Knowing your stock market terms will make you a better trader. It takes time to grasp the intricacies of securities trading, but once you do, the stock market terms above will become part of your daily vocabulary.
It is promissory note issued by companies or government to its buyers. It speaks about the specified amount held for a specified time period by the buyer.
18. Convertible Securities
A security (bonds, debentures, preferred stocks) by an issuer that can be converted into other securities of that issuer are known as convertible securities. The conversion usually occurs at the option of the holder, but it may occur at the option of the issuer.
A type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer.A debenture is an unsecured form of investment.
A security whose price is derived from one or more underlying assets. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Reducing the investment risk by purchasing shares of different companies operating in different sectors.
22. Face value
It is the cash denomination or the amount of money the holder of the individual security going to earn from the issuer of the security at the time of maturity. It is also known as par value.
A statistical measurement of change in the economy or security market. Indices have their own calculation methodology and are usually measured as a percentage change in the base value over the time.
24. Limit Order
An order to buy or sell a share at a specified price. The order will be executed only at the specified limit price or even better. A limit order sets a minimum price the seller is willing to accept and maximum price the buyer is willing to pay for it.
25. Market Capitalization
The total value in INR of all of a company’s outstanding shares. It is calculated by multiplying all the outstanding shares with the current market price of one share. It determines the company’s size in terms of its wealth.
26. Mutual Fund
A pool of money managed by experts by investing in stocks, bonds and other securities with the objective of improving their savings. These experts will create a diversified portfolio from these funds.
27. Stock Split
An attempt to increase the number of outstanding shares of a company by splitting the existing shares. It is usually done to increase the availability of shares in the market. The usual split ratio is 2:1 or 3:1, i.e. one share is split into two or three.
28. Limit Order
Limit order means to buy/sell a share with a limit price. If you want to buy/sell a share at a given price, then you place a limit order. For example, if the current market price of ‘Tata motors’ is Rs 425, however you want to buy it at Rs 420, then you need to place a limit order. When the market price of Tata motors falls to Rs 420, then the order is executed.
29. Market order:
When you want to buy/sell a share at the current market price, then you need to place a market order. For example, if the market price of ‘Tata Motors’ is Rs 425 and you are ready to buy the share at the same price, then you place a market order. Here, the order is executed instantaneously.
30. Stop order
A stop order also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock
reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order. A buy stop order is entered at a stop price above
the current market price. Investors generally use a buy stop order to limit a loss or to protect a profit on a stock
that they have sold short. A sell stop order is entered at a stop price below the current market price. Investors
generally use a sell stop order to limit a loss or to protect a profit on a stock that they own.
31. Bear Market
A period when the stock market in general declines.
A measurement of a stock’s performance calculated from past price patterns indicating
how much a stock price can be expected to move in relation to a change in the market as a