Many types of terminology are used in the stock market. Every word has a definite meaning, those who are new to the stock market should know the meaning of these words. Today I have come with a dictionary of the word used in the stock market for you. So let's start
Intraday- It is a popular word used among traders, however, by its name suggest that its validity is one day. When we take advantage of a share fluctuations price we buy it and sell it the same day, then it is called Intraday.
Delivery- When we buy a stock, but do not sell it, we keep it with us, then it is called delivery. There are no restrictions on the purchased stock you can sell it tomorrow, after a week, after six months, or after a year.
Bull Market- When a stock price increases and the increaseness will continue in the coming time, then the investor uses the bull market to show the scenario.
Bear Market- This term is used to display the viewpoint when the stock price is declining and the decline will continue in the near future, then the common people use the term bear market to demonstrate it.
Bid Price- The bid price is the maximum price that the buyer is willing to pay for the purchase of shares.
Ask Price- It is the lowest price that the sellers are willing to ready to sell their shares.
Limit order- Buying or selling with a limited price is called a limit order. understand with this example. Let's assume that the stock price of Tata Motors is trading at 100 rupees and you estimate that the stock will come down to Rs. 95, So you plac a limit order to purchase it at rs.95.
Market Order- If you want to buy or sell a company's stock at market price then you have to use market order. Let's say Tata Motors's stock is trading at Rs 100 and if you want to buy it at same price or market price, then you will use the market order. Market orders are executed instantaneously.
Bracket Order- As the name implies, there is a limit attached to this order, these orders are used only in Intraday. Bracket order give us high margin limit compared to normal MIX indraday order, therefore, when we place the bracket order, we must specify our target price and stop loss point without entering these two points Bracket orders can not be executed.
Cover Order- Cover orders are similar to bracket orders, they are also used for Intraday. The difference is that in case of a cover order you do not have to put a target price, you only need to put stop loss.
Market Capitalization- The market capitalization of a company means total no. of shares outstanding. For example, a company is xyz whose market capitalization is 20000 crores, then it will have to repay 20000 crores to buy it. Using this formula, we can get market capitalization of a company
Market capitalization=current share price*no. of shares outstanding.
Liquidity- Liquidity refers to how easily you can buy or sell a stock, without affecting its price. Due to liquidity available in one stock, it is very easy to buy and sell. Due to lack of liquidity, it is difficult to sell and buy.
Short Selling- It is a practice in which a trader sells the shares first (which he doesn’t even own at that time) for this, he borrowed the shares from his broker and hopes that the share price will be down. When the price of the stock falls he Earns profit by buying same share at lower price which is called short selling.
Go Long- It is buying shares in the hope of increasing the price. When a trader says that “I am Long”, it means that he is interested in buying that stock.
Broker- A stock broker is an individual or organization. That has the license to work in the securities market. A broker acts as an intermediary between his clients and the exchange. He buys and sells shares on the behalf of his clients, on which he gets some Commission.
IPO- When a company makes its shares available to the general investors in the capital market for the first time, it is called IPO.
Stock Portfolio- A stock portfolio is called a group of stocks that you are holding. A good portfolio helps you adjust your risk as well as profit. Put together stocks of different sectors is a sign of good portfolio.
Divided- Whenever a company is in profit then it uses this profit in two ways. The first is to give dividends to the investers, secondly to increase the bussiness operation by investing it again. Whether or not the company gives dividends to the investors depends on their need. If a company is earning profit and has sufficient funds, then it will provide dividends to the investors.
That's all, besides thousands of words used in the capital market. They can not be written in a post, but I have tried to tell the words that are necessary to know for a new investor. I hope this post will help you to understand these terms. Happy Reading!
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