As we start new to the stock market then we are like a newborn baby to this world. This financial market has a different world in itself. The most promising thing that you see is you will see many new words in this capital market. So the most important thing for a newbie is terms to know when Open account in stock market.
If you want to start investing, you must know about certain stock market terms, these all terms will help you understand the mechanics of the stock market. Because it is very necessary before you dive deep into the bottomless pool of stock market.
Terms to know when Open account in stock market
After knowing about all these terms you can read good books about the stock market. They will help you to build a fort of your core portfolio. After knowing about these words you can understand the market in a better way. So the basic thing that we can expect before entering this capital market is to be aware of basic words.
These stock market terms will help your money make more money. If you are not even paying attention to it, these are one of the terms that you can see in this financial world.
Robert Kiyosaki says” A wealthy person is simply someone who has learned how to make money when they’re not working”. So let us begin our journey in the world of investing by understanding the stock market and the elaborated list of stock market terms.
These stock market terms will take you to the fascinating world of the stock market. The stock market terms will help you understand the deep down of the financial world. The terms will be complex but you just follow the learning process.
It will help you understand the intimate relationship between the diverse events happening in the country. And how they affect the stock market. It will provide you with an overview of the financial world.
So now below we will discuss about some words that you will find useful in you financial knowledge.
Share & Stock
A share is the smallest unit by which the client can share ownership with anybody on any company. A stock is the collection of shares of a single company or collection of shares of multiple companies.
You can say that it is used to refer to a certificate indicating ownership in a company.
It is a specific facility where stocks are listed and you can go for sale/purchase. All stock exchanges (BSE/NSE) in India are now digital, so now you can access them online through a brokerage firm. You just have to open Demat account with your broker.
BSE (Bombay Stock Exchange)
BSE is the shorter form of Bombay Stock Exchange. BSE is the oldest and the largest securities market in India and has been operational since 1875. Currently there 6000 stocks or shares which are traded on BSE.
NSE (National Stock Exchange)
NSE is the shorter form of National Stock Exchange, which is the most popular stock exchange in India as well as in the world. NSE was established in 1992 in Mumbai.
It’s one of the most complicated exchanges in the world and ranked as the 4th best stock exchange in the world by trading in equity segment in 2015.
Nifty or Nifty 50
Nifty 50 is the index employed by NSE to the overall market sentiments of the Indian stock market. Nifty 50 is the word meaning National Stock Exchange Fifty.
50 stocks of companies are used to calculate Nifty. Presently there are 51 scripts used to calculate Nifty 50. They are keep changing according to their performances. They have distributed their weightage in nifty according to their market cap.
Sensex or Sensex 30
Sensex is the market index used by BSE to the sentiments of the Indian stock market. Sensex is the combination of words sensitive and index. Sensex 30 means that 30 stocks are used to calculate Sensex 30.
They are keep changing according to their performances. They have distributed their weightage in nifty according to their market cap.
When stock prices in a market are generally rising continuously, it is called a bull market. In this type of market usually investors make money.
It is a result of investors’ palpable excitement and optimism about the market or the economy.
This exact opposite of a bull market is a bear market this when the stock prices in the market are generally falling it is called a bear market. In this market, investors lose money. The bear market usually comes when the economy is in trouble.
Now we will talk about some terms which are important when you trade in market.
The dividend is a part of the profit distributed by a corporation among its shareholders. When a company earns profit during a financial year, a part of that profit is usually distributed as dividends among its shareholders.
This list is not exhaustive. There are many more terms that you will come across as you invest in the share market. Reach out to us for any help that you need. You should also find a mentor to guide you through the process of learning.
Mutual funds are a way of investing across a large number of stocks. In mutual funds, the fund manager by pooling your funds with other investors invests in many companies in a large amount.
This allows you to diversify your investment even if you have limited funds. A fund manager takes care of selecting the right stocks to invest in.
Demat or Demat Account is the term used to represent a depository where all information related to the stock holding of any individual is held digitally.
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There is mainly Depository in India, NSDL and CDSL connected through approved financial institutions like banks and stockbrokers in India. The depository work to hold your shares in your Demat account. These are government body so fewer chances of any fraud.
Demat Account Terms
So here are some terms that are used in the Demat account Mostly. These all are terms that will help you in your trading account operation.
Demat account is very easy to use if you are familiar with these terms.
Order: It is a show of intention to buy or sell shares in a given price range. For example, you may place an order to buy up to 50 shares of Company A, at a maximum price of Rs. 300 per share.
Bid: Your bid is the amount that you are willing to pay for a share.
Ask: Ask is the price at which you are willing to sell a share.
Bid-ask spread: This is the difference between the amount people are willing to buy a share and the amount at which the shareholders are willing to sell a share. A trade can only happen when this spread is resolved. That is if the lowest price at which a share for Company A is bein.
Intra-day trading: Intraday trading is about buying and selling stocks on the same day so that all positions are closed before trading hours are over on that day. Otherwise, the broker will square off your intraday positions.
Market Order – A market order is a type of order which executes as quickly as possible at the market price.
Blue Chip Stock: Stock of well-established and financially sound companies that have a market capitalization in thousands of crores.
Defensive Stock: A type of stock that provides a constant rate of dividends even in the periods of economic downturn.
Trading volume: The number of shares being traded on a given day is called trading volumes.
⦁ IPO/Initial Public Offering: The first time a company offers its share for trading on a stock exchange. Typically, you buy shares from the previous owner of the share and not the company directly. In the case of an IPO, you get to buy the shares directly from the company.
⦁ Market capitalization: Market capitalization is simply the value of stocks. If you put all current shares together then you will get the market cap of the company.
One-sided Market: A market that only has potential sellers or only potential buyers. In this type of market, the market moves one side.
Face value: It is the cash value or the amount of money the holder of a security is going to earn from the issuer of the security at the time of maturity.
Final Words –
So, at last, I just want to say that financial knowledge is very important, in fact, if you want to grow your assets or income passively then you should come into stock market with proper knowledge. After gaining all knowledge you can put your income directly in the equity market.
After knowing basically about all these words you can talk about some equity in public gatherings as well. These things work well if you are financially debt-free.
If you really want to financially burden-free then you can open a Demat account and start investing in the stock market. We will provide a link for you.
What should we check before opening demat account?
Type of broker, transactions Charges, Nomination, Online access, software and Support.
What to know when buying stocks for the first time?
Select an online stockbroker. The easiest way to buy stocks is through an online stockbroker
Research the stocks you want to buy
Decide how many shares to buy
Choose your stock order type
Optimize your stock portfolio.
What is the 3 day rule in stocks?
The ‘Three Day Rule’ tells investors and stock traders to wait a full three days before buying a stock that has been slammed due to negative news. By using this rule, investors will find their profit expand and losses contract