Stock Market terminology every beginner Trader should know

What do Stock Trading Terminology mean?

Stock market terms are short names for concepts operating in the stock market and its mechanism. This range from Stock market indices, stocks, different order types, different forms of trading tools, trading strategy etc and many more.

Below are the widely used terms in the stock market

Buy – It means to buy stocks or take shareholding in a company.

Sell – It means to liquidate the shares as your targets are achieved or you want to cut your losses.

Ask – Ask is what price other traders who are willing to to sell their stocks are demanding for their shares.

Bid – Bid is what other traders who are willing to pay for a stock are offering to sellers.

Beta – It is the measurement of relationship between price of stock and the entire movement of the whole market. If stock ABC has a beta of 1.5, this means for every 1 point move in the market, stock ABC will move 1.5 points, and vice versa.

Ask-Bid Spread– It is the difference between what Traders want to spend and what Traders want to get.

Bull – It is a market condition where Traders/investors are expecting prices to rise.

Bear – It is a market condition where Traders/investors are expecting prices to fall.

Limit Order – A limit order is a order which fullfils at the price specified by Trader for buy or sell.

Market Order – A market order is a order which fullfils as soon on the market price which is available at that moment.

Day Order – A day order is a instruction to the broker for executing the trade at particular price specified by the trader
that cancels at the end of the trading day if it is not executed.

Volatility – It means how quickly stock goes up or down.

Long – Betting on the stock that the price will increase so that you can buy low and sell high.

Averaging – This is when an investor buys as the stock goes down so as to increase the price at which purchased.

Capitalization – This is what the market thinks a company’s value is.

IPO – It is an Initial Public Offering that happens when the private company becomes a publicly traded company.

Dividend – Portion of the company’s earning which is paid to the shareholders.

Broker – A broker is a person who buy or sell stocks on your behalf.

Exchange – It is a place where different scripts are traded. In India most populare exchange where majority of trading takes place is NSE and BSE.

Portfolio – A collection of investments owned by you.

Margin – Margin account lets a person to borrow money from the broker to buy shares.

Blue Chip Stocks – The stocks behind large, industry-leading companies. Blue chip stocks are more stable and offer significant dividend payments and have a reputation of sound fiscal management.

Stock Symbol – It is one to three character alphabet root symbol which is company’s name listed on the exchange.

Intraday Trading – The practice of buying and selling within the same trading day, and squaring off the position of the markets on that day, is called day trading. Traders who day trade and participate in trading are called as “active day traders” or “day traders.”