Basic Stock Market Trading Terms


Stock trading is very uncertain game in which you never predict the result without experience and knowledge. Before start trading you should know basic of trading other wish you can’t make money. You should learn the fundamentals first and then go on to expand on that information during the program.. For become an expert you need to understand the market nerves and deep analysis on them, how the stock price of the company increases or decrease, you must know and make. There are many experts and advisory firm provide tips such as Stock Tips, Option Tips for option trading, Forex Tips and Nifty Tips for Nifty index stock, you can take benefit of these tips if you are also researching the market. Here are some terms that you should know if you want to be an expert and profitable trader.

Averaging Down: – This term means when any investor purchases more than one stock and the price of the stock goes down and then the condition is known as Averaging Down condition. In this condition your average purchase price drops off. Most of time traders bear loss in this situation.

Bear Market: This is a particular trading talk when the stock market becomes a downward situation, and stock prices falling. This is the total opposite to the bull market. When the market is in this situation, probability of inflation is also increased.

Beta: It is basically calculation of the relationship between two important terms which are the stock price and the entire market movement. Every trader always puts their concentration on the beta. We elaborate with example If  a stock  of ABC company and it  has a beta of 2.5, that shows that for each 1 point movement in the market, stock of ABC travel 2.5 points and vice versa.

Blue Chip Stocks: It shows big leading companies in own sectors. It is top stocks which are indexed in exchange. They give us a secure record of considerable dividend costs and have a status of sound fiscal organization. The given expression is considered to have been resulting from blue gambling chips, which is the premier denomination of chips used in casinos.

Bull Market: This is another important trading talking term when the stock market goes positive wave and also stock prices increase. This is the opposite situation in the bear market. When the market is in this situation, most of trader feels good. 0

Broker:  When an investor trade offline then they need broker, the broker is intermediate between traders and exchange. They buy or sell stock for you in exchange. Traders communicate broker via mobile call, mail and other sources, most of broking services are paid, and they take some percentage on your trade as their charges. Most of trades perform trading by taking tips from brokers.

Day Trading: The buying and selling stocks within the same day before the closing of the market, then the trading is called Day trading. For the stock market its time up to 3:30pm and for commodity market is up to 11:30pm.The traders that trade in day trading are also known as “active traders” or “day traders.”

Dividend:  This is an added facility which is provided to the shareholders by the company, most of the companies offer dividend but some not. Basically, it is a part of a company’s earnings that would be paid to shareholders according to their shares. Shareholders use these dividends either purchase another shares or convert in case.

Exchange: An exchange is a board which is regulated trading and makes rules and regulation of trading so that traders could secure trading. The most famous stock exchanges are New York Stock Exchange and the NASDAQ in USE and In India two most famous exchanges are Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Execution: It is a process in which, when an order for trade has been done and you put 100 shares in order that means all the 100 shares have been sold, this process is called Execution.

Hedge: This is most important tool which is used to control your losses. By this you can take an offsetting position. For better understanding we take an example, if you hold 100 shares of ABC Company, on the stock you can short the stock or futures positions.

Index: An index is used to benchmark in all the industries which are registered with SEBI. An Index illustrates an indication of the marker for all share traders and portfolio managers. A 10% of the index may sound good, although when the market index gave 12% that means you didn’t do exceptionally well as you could have presently invested in an index investment and process for saved time by not trading normally.

Initial Public Offering (IPO): This is a primary sale in which a company is offering stock to the public, relatively being owned by private or indoors investors.

Margin: A margin is basically an amount that a trader takes out a loan from a broker to buy an investment. We say in other words, that the margin is the difference between the amount of the loan, and the security’s price.

Moving Average: – A moving average is average of stock price-per-share during a definite time period. Most of time frames are about of 50 and 200 day moving averages.

Order: An order is just request that investor performs for bid to purchase or sell a definite amount of stock or option agreement. You have to apply an order to purchase or sell shares in a lot.

Portfolio: Records of investments owned by traders. You can contain as small as one stock to infinite amount of stocks in a single portfolio.

Quote: This is the latest trading price of a particular stock. Sometimes it can be delayed by 20 minutes unless you are using a definite broker trading proposal.

Rally: It shows a situation in which a quick increase in the price level of stock in the market.

Sector:  A sector means group of same type stocks where the companies of the stocks do same business. An example of a sector is Apple and Microsoft is the same sector companies which is IT Sector.

Spread: It is the price difference between bids and asks of a stock.

Stock Symbol: A special symbol which is used in the form of 1-character to 3-character, root symbol and alphabetic, which symbolize traded corporation on a stock exchange.  AAPL is the stock symbol of Apple.

Volatility: This indicates to movements of a stock price or the progress of the stock market as entirely. Extremely volatile stocks are traded with daily up and down activities and extensive Intraday trading choice. This is frequently common with require stocks that are finely traded and contain small trading volumes. On the other hand it is also familiar with the stocks of Tim trades.

Volume: The total numbers of stock, which traded during a specific time period, usually calculated on average every day trading volume.

Yield: This usually indicates to the determination of the result on an investment that is obtained from the dividend. This is calculated by dividing the amount of the annual dividend by the stock price which is paid.

Leave a Reply

Your email address will not be published. Required fields are marked *