When I first entered the share market world, I spent an enormous amount of time Googling the basic stock market terms which are used in the share market.
Although there are many terminologies which a stock market trader should know, they are a handful of stock market terms that are used very often.
This basic domain knowledge of these stock market terms is really important if you want to enter the stock market to succeed.
Buy – This means buying shares or taking a position in a company.
Sell – Getting rid of the shares as you have achieved your goal or want to cut down losses.
Ask – Ask is what people who are looking to sell their stocks are looking to get for their shares.
Bid – Bid is what you are willing to pay for a stock.
Ask-Bid Spread– Spread is the difference between what people want to spend and what people want to get.
Bull – A bull market is a market condition where investors are expecting prices to rise.
Bear – A bear market is a market condition where investors are expecting prices to fall.
Limit Order – A limit order is a type of order which executes at the price placed for buy or sell.
Market Order – A market order is a type of order which executes as quickly as possible at the market price.
Volatility – This means how fast a stock moves up or down.
Going Long – Betting on the stock price will increase so that you can buy low and sell high.
Going Short – Betting on the stock price will decrease so that you can buy high and sell low.
Averaging Down – This is when an investor buys as the stock goes down so as to increase the price at which purchased.
Capitalization – This is what the market thinks a company’s value is.
Float – This is the number of shares that can be actually traded after deducting the shares held by insiders.
Authorized Shares – This is the total number of shares that a company can trade.
IPO – It is an Initial Public Offering that happens when the private company becomes a publicly-traded company.
Secondary Offering – This is another offering in order to sell more stocks and to raise more money from the public.
Dividend – Portion of the company’s earning which is paid to the shareholders.
Broker – A broker is a person who buys or sells stocks on your behalf.
Exchange – An exchange is a place where different types of investment are traded.
Portfolio – A collection of investments owned by you.
Margin – A margin account lets a person borrow money from the broker to buy shares.
Sector – A group of stocks in the same sector.
Stock Symbol/Ticker – A one to four-character alphabet root symbol which represents a company listed on the exchange.