Updated Mar 23, 2022

What are the terms most used in the Stock Market?

What are the terms most used in the Stock Market?

Introduction

Young people interested in stock trading often lack the fundamental market understanding. Investing adequate time and money in trading work as fundamental tools and training needed to make sound judgments. So, it would be best to familiarise yourself with a few essential phrases before investing in the stock market, let's have a look at the following glossary.

What is the Stock Market?

In the stock market, traders and businesses may purchase and sell stocks and issue new shares of their stock. There are two types of stock: those that reflect the company's equity and those that represent its assets.

Having a better understanding of the stock market's terminology will make you a more effective investor.

1. Client: Brokerage firms are referred to be agents when they purchase or sell shares on behalf of their clients. The agent will never hold a share of the company's stock at any stage throughout the transaction.

1. Offer: The lowest price at which an owner wants to sell their share in the market.

1. Assets: To determine a company's worth, you must look at all of the assets it has in its name, such as cash, equipment, land, and technological innovations.

1. Bear Market: A bear market is one in which the value of an investor's investment drops steadily.

1. Beta: Beta is a measure of the correlation between a stock's price and the overall market's movement.

1. Bid: An investor's willingness to pay the maximum amount they can afford is called bid.

1. Blue Chip Stock: Companies that have been around for a long time and have a history of continuously growing dividend payments to shareholders are known as "Blue Chip Stock." Typically, blue-chip companies have a market valuation in the hundreds of billions of dollars.

1. Bonds: Bond is unsecured debt imposed by the state or a firm to its investors. It displays the amount an investor owes to the bond issuer for a certain duration of time at a fixed or floating interest rate.

1. Book: Electronic record of all pending orders for specific stocks, including purchase orders for the stock.

1. Brokerage Firm: Registered securities firms are known as broker/brokerage firms. As an adviser for the purchase and sale of listed stocks, brokers do not hold any of the assets at any time. However, they do charge a fee for their assistance.

1. Bull Market: A bull market is one in which stock prices rise regularly.

1. Business Day: Monday to Friday, except public holidays, is considered a business day.

1. Call Option: One of the most common options is a call option, which gives a trader the ability but not the responsibility to purchase the stock of their choice at a certain price and time.

1. Close Price: The stock's closing price is set at a specific value on a certain trading day.

1. Annual Report: Each year, every corporation writes an annual report to impress its shareholders. Cash flow and management strategy are included in an annual report. Several individuals examine the annual report to assess the organisation's financial health.

1. Arbitrage: An arbitrage involves buying assets from one market and then selling them to another market where the selling price is greater than the purchase price.

1. Averaging Down: When the value of a specific stock drops, the investor uses the "averaging down" strategy and buys additional shares, which lowers the stock's average cost.

1. Dividend: Dividends are payments made to shareholders or investors in the firm on a quarterly or yearly basis when the company makes a profit.

1. Sensex: The Sensex index represents all of the relative share values listed on the exchange.

1. Nifty: For India's equities market, the Nifty 50 Index, or the National Stock Exchange of India, is the major and most widely used stock market index. The Nifty 50 is one of two major stock indexes used in the Indian stock market, and it comprises 50 Indian firm stocks from 12 distinct sectors.

1. Quote: A quotation is included in the stock's current trading price. The bid and ask prices, last traded price, and volume traded are all included in a basic stock quotation.

1. Portfolio: A portfolio consists of all investments details made by an individual investor.

1. Liquidity: It is important to have rapid access to your investments if you want to sell them off for a quick profit. Liquidity refers to a stock's ability to be traded rapidly and often.

1. IPO: An initial public offering (IPO) occurs when privately held firm issues are shared with the general public for the first time. Investors may acquire stock directly from the firm in an IPO.

Conclusion

Even if you've been in the stock market for a long time, you'll need to grasp some of the fundamental phrases. As your knowledge of the stock market increases, you will become both a better investor and a more successful trader. The above-mentioned list of terminologies will help you to well-familiarise with stock market procedures.