I often talk about the stock market, its investment options, and strategies, benefits and risks involved, etc. In every article, I recommend you to start investing in stock markets. No matter how you do it, directly or indirectly. But what’s left up until now is that I have never talked about the basic and common terminologies used in the Stock Market. I mean, you can’t solve mathematics without knowing the basic BODMAS and terms. In the same way, if you are to invest in the stock market, you need to know, at least, some of the Stock Market Terminologies.
Well, don’t you worry because I am not going to bombard technical jargon at you. But you are a beginner, and so am I. Therefore, I will treat you all at my own limit. I will let you in on some important stock market terminologies that might help you earn some serious money. However, if you’d learn them too, you might end up knowing and earning more than the majority.
Table of Contents :-
What is a Stock Market?
Lol. I write this thing in almost all of my stock market articles. I’m not going to write here; rest assured. I know that by this time, you obviously are aware of what the stock market is. It is a place where companies from all over the country list their shares and people buy-sell those to make profits. Well, there is more to it. If you’d still like to read, allow me to link some of my articles here –
Why Stock Market? Free Guide to Beat Inflation
In this article, I’d strictly write about Stock Market Terminologies.
Why should you learn Stock Market Terminologies?
As I stated in the first part, to solve math questions, you need to have knowledge of basic mathematical terms. Similar is with the stock market. You can never be able to generate wealth and make profits without knowing the market terms. Stock market terminologies are the market-industry-related terms that are regularly used by people. From amateurs to hardcore traders, everybody uses these terms. It is kind of necessary.
There are numerous terms used. Trading, investing, equity, short sell, agent, and many more. Let’s say you know none of these. Now how do you plan on investing money in the market and making profits? You can’t. Even if you randomly pick a company and bet your money, it’d be nothing more than a wild-double-edged guess.
For starters, tell me, how will you decide if the time is right for you to invest? You will have to consider two things – Your investing taste and the second is if the market is in a Bull run or Bear run.
Get it? Now you feel like knowing what a Bull or Bear run is. This is not the only time; as you carry your way around the market more, you’ll feel the need. The need-to-know Stock Market Terminologies.
Now, without a further delay, let’s dive right into some of the market terminologies you’ll need to know.
Basic Stock market Terminologies
You can either be a beginner or a seasoned stock market investor. This article will work for you either way. Below are some of the stock market terminologies that I feel every investor must know. Assume it is like a necessity to survive in the market. Let us allow the glossary to do the talking –
- Buy – Obvious, isn’t it? Well, we need to start slow. Anyways, Buy means the buying of the shares of a company.
- Sell – The stock market works to way; you either Buy stocks/shares or sell them.
- Exchange – It is the designated place or space where everything related to the stock market happens. Like for India, we have Bombay & National Stock Exchanges.
- Broker – This is the person who completes your orders for you. Be it selling or buying stocks.
- Ask – This term refers to the need of people who are looking to sell shares at the desired price. Ask is the desired price.
- Agent – Like the brokers, agents act on behalf of a stock brokerage firm.
- Ask-Bid Spread – It is the difference between the spending desire and what people want to buy.
- Bull – A bull market is when investors & the market expect a rise in the prices. Market allegedly goes up as a whole. Just as a bull attack in an upward direction.
- Bear – A bear market is just the opposite of the Bull. When the market either goes down or people expect it to go down, it is referred to as a Bear run. A bear attacks downward!
- Bid – A bid is what a person is willing to pay for a share of stock.
- Market Order – It is the order to buy or sell stock(s) or share(s). The order is executed quickly at the current Market Price.
- Limit Order – It is kind of the same as the Market order. The only difference is that the order gets executed at the desired price and not on the current market price.
- Day Order – It is an order for the broker to complete a trade at the desired price. If it does not happen by the end of the day, the order expires.
- Going Long – It is a betting term. A person bets on a stock’s price, assuming it will rise. The motive is to buy low and sell high for profits.
- Averaging Down – This term comes into action when an investor buys more of a falling stock. This is done to decrease the price at which the shares are bought.
- Volatility – The pace at which a stock price changes.
- Capitalization – This term is used to cap a company’s market value.
- Authorized Shares – This refers to total shares that a company can trade. Every company has a fixed number of shares.
- IPO – Stands for Initial Public Offering. It happens when a private company goes public and gets listed in the stock market.
- Secondary Offering – It is another offering that aims at selling more stocks/shares to raise needed money for the company.
- Dividend – It is like an appreciation gift that a company pays its shareholders. It is a part of the company’s earnings.
- Sector – The stock market lists multiple companies of multiple sectors. Like there are companies from the tech sector, banking sector, etc.
- Margin – It is a type of loan. It allows investors to borrow some money from the broker.
- Portfolio – It is like a collection. It contains all the investments that you currently hold.
- Blue Chip Stock – This refers to the equity stocks of the established companies and falls under the large-cap category.
- Open Price – The price of a stock at which the market opens is called the Open price.
- Close Price – It refers to the price of a stock at EOD (end of the day).
How to Invest in the Stock Market?
All of the stock market terminologies that I’ve mentioned above are not only meant for reading. Put this knowledge you have gained into use and bang on! Now what I want you to do is start investing in the stock market at once.
In case you do not know how to start investing in the stock market. Believe me, investing in the market now is easier than ever. All you need is a smartphone, a Demat account, and some money to put into. That’s it.
I personally love to invest in technology stocks. Not a recommendation, but I don’t know; if you want it, you know it. However, if you have further questions, doubts, or requests, feel free to ping me up.