Stock Market Terms For Beginners – Stock Market Terms You Must Know Before investment

               Before the investment in the stock market you need to be familiar with stock market investment. In the stock market first step of the trade or of your investment life cycle involves placing the order. It is followed by the matching and execution of the placed order.

             Stock market terminology relates to industry specific which are used in the stock markets regularly. Even the experts and amateurs use these terms frequently to explain trading strategies, indices, stock market patterns and other components of the stock market.

Basic Stock Market investment Terms / Terminology that you must know before investment

1. Equity

2. Ask/Offer

3. Bid

4. Spread

5. Exchange

6. Broker

7. Bull Market

8. Bear Market

9. Trading Account

10. Volatility

11. Dividend Yield

12. Beta

13. Call Option

14. Close Price

15. Volume

16. Face value

1. Equity

          One of the most essential terms in stock trading is equity that is refers to the amount of owned shares of a company. As an investor, when you buy the shares of a company, you buy an equivalent degree of ownership in that company.

2. Offer

          An Offer in share market is the lowest amount of money that the seller of a stock is willing to accept for a share of that stock.

3. Bid

          A bid, on the other hand, refers to the highest amount of money that a potential buyer for a stock is willing to pay for a share of that stock. If there are multiple buyers for a stock, they will each offer their bids and lead to a bidding war.

4. Spread

          In stock market Spread refers to the difference between the bid and the ask prices of an equity share. You may perceive it as the difference between the amount at which you would like to buy and the amount at which you would like to sell a stock.

5. Exchange

          Exchange refers to a place or an electronic market where various securities are traded. When it comes to stock trading, an exchange refers to one of the many stock exchanges in the country or worldwide where shares of stocks are bought and sold.

6. Broker

          Broker is the key person or medium between the company and investor. Who purchases or sells investments/stocks on behalf of the investor/trader in return for a commission.

7. Bull Market

          Bull market is a market where the prices of the stocks are increasing over a prolonged period of time. A single stock and a sector can be bullish at one time and bearish at another time.

8. Bear Market

          An opposite of the Bull market and Bear Market refers to a period in which the prices of equity shares fall consistently. It’s usually a condition where share prices fall by 20% from current price.

9. Trading Account

          Trading accounts are an essential and important tool for every investor who participates in stock trading. Traders are required to open an online trading account with a registered broker, to execute their trades electronically. All orders to buy or sell shares take place through this trading account.

10. Volatility

          Volatility refers to the fluctuations in the price of an equity share. Highly volatile stocks witness severe ups and downs during trading sessions. These are highly risky bets which can bring huge profits for the skilled trader.

11. Dividend Yield

          The ultimate goal of every stock trading practice is to enjoy favorable returns. This is known as the dividend yield. Dividend Yield mainly refers to the return of investment on a stock, and is expressed in terms of percentage.

12. Beta

          Beta measures the association between the price of an equity share and the overall movement of the stock market. Beta of the market is assumed to be 1. A stock’s beta of more than 1 shows a higher risk than the market. A beta of less than 1 show that stock is less riskier.

13. Call Option

          In the Call Option, the buyer of the option get the right but not the obligation to purchase the underlying asset at a specified price and time.

14. Close Price

          It is the final price on a specific trading day at which the equity shares of a company are sold or traded.

15. Volume

          It shows the average number of stocks which are traded during a particular time, usually the daily trading volume.

16. Face value

          It relates to the amount of money or the value in cash that the holder of a security will obtain from the issuer of the security when the security matures at the specific date.