The stock market can be perceived as a daunting platform to master by young and novice individuals who are interested in beginning their investment journey in stock trading. There are certain commonly used concepts and terms that every stock market investor must be familiar with to understand and succeed at stock trading. However, the reality is that many individuals do not possess such necessary knowledge, and as a result, they may often find themselves to be flustered by the plethora of complex financial terms that one normally encounters throughout trading.
Thus, as a novice investor looking to succeed at stock trading, here are seven key terms that you must know:
1. Equity
Equity refers to the number of shares an investor owns in a company. As an investor, when you purchase stock in a company, you acquire an equal share of the company’s ownership. Shares and equity are traded on the stock market, which is where investors can buy and sell these investments.
2. Ask/Offer
To put it another way, asking price or offer price is the lowest amount of money sellers are willing to accept for a share of a particular stock. As a result, if you’re considering investing in stocks, keep an eye out for the current “ask” price.
3. Bid
Bids, by contrast, are an indication of how much a potential buyer is willing to pay for a particular share of stock. There may be a bidding war if multiple buyers are interested in the same stock. When one buyer makes a bid that no other buyer can or wishes to match, the auction is concluded.
4. Exchange
Different securities are traded on an exchange, whether it’s physically present in the market or not. There are several stock exchanges all over the world where shares of stock can be traded. The National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE) are the two most well-known stock exchanges in India.
5. Bull Market / Bear Market
The terms “bear market” and “bull market” are frequently used in articles about the stock market. A bullish (upward) or bearish (downward) price movement on the stock market is denoted by these two terms. A bull market is one in which stock prices are rising steadily, and as a result, the market as a whole is moving upward, while a bear market is one where stock prices are consistently falling, and the market is consequently in a downward trend.
6. Trading Account
A trading account is an investment account that is required for buying and selling securities in the stock market. It is an electronic system where in investors who want to engage in trading open a trading account with a registered stock market broker. Each account is assigned a unique trading ID that is used to perform transactions online.
7. Demat Account
A demat account (short for dematerialized account) is like a bank account for investors. However, instead of holding money, a demat account holds all shares and other securities purchased by an investor in electronic format. It facilitates easy trading by holding all investments made by an individual – be it shares, bonds, mutual funds, government securities, insurance policies, etc. in one place. It is digitally secure, more convenient than actual physical certificates and enables speedy transfer of shares.
Conclusions
Investing in the stock market can be a rewarding experience if one possesses the basic knowledge required for stock trading. In today’s times, to begin investing in the stock market, one only needs to conduct preliminary online research, gather relevant information and open a trading account with an established brokerage firm.
These seven stock market terms will help you take things a step further by making you a better, more informed trader who possesses a basic understanding of the fundamentals of the market. Though it may take a while to understand and familiarize yourself with all the terms used in the stock market, these seven key terms will serve as an important stepping stone and be an integral part of your day-to-day trading activities.
ABOUT STOXKART
Stoxkart is a rapidly growing discount brokerage trading platform that empowers traders and investors by sharing its market expertise, new-age technology, zero brokerage advantages, and an opportunity to invest in mutual funds online. Along with offering a free Demat account and no profit-no brokerage advantages, it also offers a better online trading experience at zero cost. This technology-enabled company provides trading platforms on mobile, browser, and desktop for an uninterrupted trading experience. Join the community of traders and start your new year with the right investments.