Stock Market Terminology for Beginners

Stock Market Terminology for Beginners - Here is a dictionary and glossary of share trading terms (terminology) and their meaning. These are most commonly used terms in stock market and share trading.

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.
Aggressive Strategy – Strategy to invest in stocks with aggression and high risk with expectation of good return.
BSE – Bombay Stock Exchange, is an Indian stock exchange located on Dalal Street in Mumbai.
Buy – To invest in shares of a stock for intraday trading, short-term investment or long-term investment.
Buying Limit – Buying Limit or BL is the amount of money an Investor sets aside from his bank account for share trading + (plus) the amount realized from the sale of any shares you may have previously made – (minus) any purchases you have made.
Sell – To sell a stock and book profit or loss.
Hold – To hold a stock in portfolio for a longer period for a more or better return.
Badla Financing: “Badla” in share trading means something in return. It is a system to carry-forward.
Buy at Open – Placing a buy order before the market opens. The order gets executed at the current opening price.
Capital Gain – Profit from the sale of an investment.
Capital Loss – Loss from sale of an investment.
Close a Position – To end an investment by selling or buying. Closing a long position requires selling, and closing a short position requires buying.
Cover – To purchase a previously sold contract.
Current Market Value -The current value of a portfolio.
Day Trader – A stock trader who buys and sells stocks on the dame day.
Day Trading or Intraday – Buying and selling stocks on the same trading day without taking possession of stocks for a long time.
Demat Account – Demat refers to a Dematerialised Account. It is needed for share trading (buy, hold and sell shares / stocks).
Diversification – Creating a portfolio by investing in several stocks, bonds and other investments.
Dematerialization – The process by which an investor in share market gets physical share certificates converted into electronic form maintained in an account with the Depository Participant.
Equity – A stock or any other security representing an ownership interest.
Fundamental Analysis of a Company – Examining the financial and managerial aspects of a company prior to investing.
Growth Strategy – Investing in companies that are growing faster than its competitors.
Hedge Fund – Fund for aggressive trading.
Insider Trading: Transactions in securities of some company executed by a company employee for personal profits.
Intraday Share Trading: Intraday share trading or day trading is for traders in Stock Market in India who want to gain from market fluctuation in a day but have limited money.

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1. Aggressive Strategy – Strategy to invest in stocks with aggression and high risk with
expectation of good return.

2. BSE – Bombay Stock Exchange, is an Indian stock exchange located on Dalal Street in
Mumbai.

3. Buy – To invest in shares of a stock for intraday trading, short-term investment or long-term
investment.

4. Buying Limit – Buying Limit or BL is the amount of money an Investor sets aside from his
bank account for share trading + (plus) the amount realized from the sale of any shares you may
have previously made – (minus) any purchases you have made.

5. Sell – To sell a stock and book profit or loss.

6. Hold – To hold a stock in portfolio for a longer period for a more or better return.

7. Badla Financing - “Badla” in share trading means something in return. It is a system to carry-
forward.

8. Buy at Open – Placing a buy order before the market opens. The order gets executed at the
current opening price.

9. Capital Gain – Profit from the sale of an investment.

10. Capital Loss – Loss from sale of an investment.

11. Close a Position – To end an investment by selling or buying. Closing a long position requires
selling, and closing a short position requires buying.

12. Cover – To purchase a previously sold contract.

13. Current Market Value -The current value of a portfolio.

14. Day Trader – A stock trader who buys and sells stocks on the dame day.

15. Day Trading or Intraday – Buying and selling stocks on the same trading day without taking
possession of stocks for a long time.

16. Demat Account – Demat refers to a Dematerialised Account. It is needed for share trading
(buy, hold and sell shares / stocks).

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17. Diversification – Creating a portfolio by investing in several stocks, bonds and other
investments.

18. Dematerialization – The process by which an investor in share market gets physical share
certificates converted into electronic form maintained in an account with the Depository
Participant.

19. Equity – A stock or any other security representing an ownership interest.

20. Fundamental Analysis of a Company – Examining the financial and managerial aspects of a
company prior to investing.

21. Growth Strategy – Investing in companies that are growing faster than its competitors.

22. Hedge Fund – Fund for aggressive trading.

23. Insider Trading - Transactions in securities of some company executed by a company
employee for personal profits.

24. Intraday Share Trading - Intraday share trading or day trading is for traders in Stock Market
in India who want to gain from market fluctuation in a day but have limited money.

25. IRA – Individual Retirement Account. A tax-deferred retirement account for an individual that
allows him to set aside up to $2,000 per year, with earnings tax-deferred until withdrawals
begin at age 59 1/2 or later.

26. Long-Term Investment – Investment money for a longer period.

27. Limit Order – Buying or selling stocks on a fixed price rather than the current market price.

28. Long Position – Buy stocks from the long side with the expectation that prices will rise.

29. Margin Account – An account with a brokerage company allowing an investor to borrow
money from the broker to buy securities.

30. Margin Trading - Borrowing money from the broker to purchase stock.

31. Money Management -The art to manage money with investments, budgeting, banking, and
taxes.

32. NIFTY 50 – NIFTY 50 is a benchmark index of Indian stock market representing the weighted
average of the largest 50 Indian companies listed on the National Stock Exchange.

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33. NSE – National Stock Exchange of India Limited located in Mumbai.

34. Open a Position -To open an investment buy buying or selling. Opening a long position
requires buying, and opening a short position requires selling.

35. Overbought and Oversold Indicator – Tool to determine if stocks are oversold at higher rates.

36. PE Ratio: Current Price of a Stock ÷ Annual Net Income per Share.

37. Risk Management – The art to manage risk profile of an investor.

38. Risk Tolerance – An investor’s potential to handle risks in terms of investment.

39. Securities Lending - Holder of securities or their agent lends eligible securities to borrowers in
return for a fee to cover short positions.

40. SENSEX – Benchmark index of BSE in India. The Sensex is comprised of Top 30 largest and
most actively traded stocks on the Bombay Stock Exchange.

41. Short – The state of having sold a stock short without having covered it.

42. Short Selling – Borrowing a security or commodity futures contract from a broker and selling
it with the hope of making profit. All such securities must be later bought back and returned to
the broker.

43. S&P 500 – A basket of 500 stocks that are considered to be widely held by investors.

44. Spread – Difference between the current bid and the current ask price of a stock.

45. Technical Analysis – A method of evaluating securities through historical prices and other
trading variables.

46. Ticker Symbol – A system of letters used to uniquely identify a stock or mutual fund.

47. Volatility – The relative rate at which the price of a stock moves up and down.

48. Volatile Stocks – Stocks that are affected by stock market fluctuations in terms of Price and
Volume.

49. Volume – The number of shares, bonds or contracts traded during a given period, for a security
or an entire exchange.