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10 Stock Trading Terms You Should Know

28 Nov 2023

The stock market is a lucrative investment avenue if you have a risk appetite and a long-term horizon. However, it is a technical platform with some jargon that beginners might not understand. So, here is a look at some common trading terminologies for starting your trading journey on the right note.

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Trading Terminology for Beginners

  • Primary and secondary markets

The primary market is one wherein the company offers shares to the public for the first time. IPOs are offered in the primary markets. Whilst, he secondary market is where trading takes place. Existing stock shareholders can buy or sell the stocks from other shareholders. The stock exchange is a common example of a secondary market.

  • Bull and bear markets

Bull and bear markets indicate the trend in the stock market. A bull market is when the stock market is on an upswing, and the prices of most stocks increase. On the other hand, a bear market is when the prices of stocks are falling, and the stock market is declining.

  • Broker

Stock trading happens through a broker, who is a middleman who allows you to buy and sell shares in the stock market.

  • Opening and closing prices

The opening and closing prices refer to stock prices at the start and end of a trading day. The difference between the two prices shows how much the stock price has moved during intraday trading.

  • Dividend

When companies make significant profits, they might distribute some of it to their shareholders. This distributed profit is called the dividend.

  • Market capitalization

Market capitalization is defined as the overall value of a company’s outstanding shares at the current market price. In simpler terms, if you multiply the current market price per share by the total number of shares issued by the company, you get the market capitalization.

  • Intraday and delivery trading 

Intraday trading means buying and selling shares within the same trading day. On the other hand, delivery trading means buying shares on one day and selling them on another trading day, which can be after a few days, weeks, months, or even years.

  • Bid and Ask

The bid is the maximum price a buyer will pay for a stock, while ask refers to the lowest price that a seller is willing to accept for selling the stock.

  • Spread 

The difference between the bid and ask price is called spread, wherein the bid price is usually lower than the ask price.

  • Yield

Yield is the return that a stock has offered over a specified duration.

Final Words

The aforementioned stock trading terms might seem technical, but are quite simple to understand. However, to ensure a seamless trading experience, gather detailed information on these terms before starting your trading journey.

 

Related Articles:  Is Supply and Demand Trading Suitable for Day Traders in Volatile Markets | Mastering the Super Trend Indicator: A Traders Guide

 

Popular Stocks:  HDFC Bank share price | ICICI Bank Share Price | UPL Share Price | Tata Consumer Share Price | Divislab Share Price

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