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The understanding Stock market is not as easy as it looks. One has to understand How the stock market works. So, one will get to understand the stock market reality once he starts investing.
But before investing in the stock market, basic knowledge of stocks is vital. So, one will come across lots of terminologies while investing.
Like, today bull market is performing at the pare, the market capitalization of the company, Demat account, and so on. These are some of the stock market terminologies.
So, one will have to understand the Stock Market Terminologies well enough to understand the market well. Additionally, to make good investments.
Advantages of knowing Stock Market Terminologies
Before starting any kind of business in any field, one has to be aware of the basic things. Like, he or she as to know the ways business works and terms used in the business.
Eventually, understanding the terminologies will help them to grow and understand the business well in a particular field.
Even Understanding stock market terminologies is also vital. Here are some of the advantages of learning stock market terminologies
- Learning about the stock market terms feels individuals confident.
- One can easily follow the news about the stock market. Because any media try to explain the whole situation in terminologies rather than dragging.
- Can easily communicate with the high profile members in the stock market.
- Individuals will have a crystal clear understanding of the market.
- Stock Market Terminlogies
We often come across the terms like Bull market and Bear market. Many of us have confusion like
- What is a Bull market?
- What is the Bear market?
- Is the Bull and Bear market is same?
Bull Market and Bear is not separate from Stock Market. Even these two markets don’t have any separate entities.
But these two market Bull Market and Bear Market is just indicator of the performance of the Stock market.
It indicates that Stock Market is performing well. Even the country’s financial situation is also on the rise.
Here Bull Market suggests that the Overall Stock Market status trajectory is up. This makes the investors feel safe and secure about their investments. Even new investors are also urged to make new investments in the stock market.
As the Bull indicates strong, resilient, rigid, and powerful refects the Stock market status.
It is opposite or contradictory to Bull Market. Here, Bull Market is the negative indicator of the stock market.
This terminology is alarming clock to investors about the bad situation of the stock market.
Bear Market suggests the people to the vulnerable state of the Stocks and market might be about to crash.
COVID-19 is the latest and relevant example of the Bear Market. In this pandemic situation in India, make large, medium, and small-scale business revenue is down.
Then overall GDP (Gross Domestic Product) had verge of declination and touches to negative as well. All the company share prices were down during those time.
In this tough situation, the Stock Market condition is also referred to as the Bear market.
Before understanding about trading. Many beginners in the stock market beginners won’t know the difference between trading and investing.
Investing means having long-term goals and a mindset. Here, investors won’t sell the share in days or weeks instead they wait for long years.
So, the overall gain increase at the end. This type of investing doesn’t have any risk.
This kind of investment is done on Large-cap companies and has a huge brand name in society.
Trading is contradictory to the above term. Here the investors are eager to make high profits within a shorter span. So, one will invest in shares of the new and small-cap companies which is rising.
Here, investors can sell or buy them with a shorter span. If one buys the share and sells on the same day is called intraday trading.
Here, Intraday trading has a lot of risks and one can easily lose or gain heavily.
Eventually, trading involves buying and selling shares within hours or on the same day. But one has to follow the grapy carefully. Otherwise, intraday traders have to face losses.
Stock Broker: Stock market terminologies
Here Stock Broker is a mediator between the traders. Stock Broker helps traders to make an investment in share which has a high return and safe investment.
Whenever traders earn from the shares, part of the earing is given to the stockbroker in the form of commission.
Stock Market beginners will follow the stockbrokers to make profitable investments. Earn as much knowledge from the brokers and then don’t depend on them for too long.
Even if the traders are under losses, stockbrokers will have their commission timely. So, deal with the good stockbrokers to make good earnings.
Portfolio: Stock Market
Here stock market Portfolios represent an individual’s performance in the Share market. So, their portfolio shows the kind of investment made by the individuals.
A portfolio is nothing but the overall investment one has done. So, it is nothing but a record of what all the shares and investments are giving a return. If the return is good enough then that portfolio is called a good portfolio.
Divident : Stock Market Terminlogies
Whenever making long-term investments in Stocks, then one can enjoy the liberty of taking a dividend from the company.
Here dividend is nothing but profit. Some big and reputable companies will give a dividend to its shareholder quarterly or annually.
But giving dividends is completely left to the company. The majority of the companies like making good profits annually, emerging as a market leader, capturing the huge market share will give a dividend to the stakeholders.
For example companies like
This is one of the basic stock market terminologies. From short selling, one can earn a lot of profits.
Radhakishan Damani, Dmart founder is one of the best in short selling.
In short selling, one will sell the shares (not owing at that time) and again buys the share when the price of the share declined.
To know more about short selling
Any investors before investing in the company look at the market capitalization.
Here market capitalization is the total value of the company. Companies are categorized accordingly
So, every investor makes an investment in these categories of companies.
To calculate Market capitalization,
Market Capitalization = Number of outstanding shares * price of one share.
Outstanding shares means the shares already purchased by traders, companies, angel investors, VCs
Demat Account: Basic Stock market Terminologies
Before starting investing in the share market, one has to have a Demat account to proceed.
Demant account gives an identity to the traders to start their investment. Even Demant’s account holds the shares and securities such as Bonds, Mutual Funds.
Trading Account, on the other hand, provides the platform to sell or buy shares.
Volatility: Basic Stock market Terminologies
Volatility in the share market is the fluctuation in the price of the shares. Many shares in the stock market are prone to fluctuations.
So, the prices of the share varying to a large extent are called High Volatile stocks.
This term refers that how easily the shares can be sold or purchased. Here, shares with high liquidity will have more demand in the market.
In high liquidity shares, one cannot make huge profits instead they can expect a decent return.
For example, shares of Infosys, TCS are in demand can easily be sold or purchased.
But if any new companies shares will not have the same amount of demand in the market. So, this type of share is called low volatile stocks.
So, these are the stock market terminologies like Bull Market, Bear Market, Portfolio, dividend, and many more.
One had got the answers to questions like
- What is Bull Market?
- How Bear Market is different from Bull Market?
- What is Portfolio?
- What is Volatility in the Share market?
- Liquidity in Stock Market?