Understanding the basics of the stock market starts with learning its key terms. For beginners, the terminology can seem overwhelming, but mastering these concepts is essential for making informed trading decisions. This guide covers the most important stock market terms that every new trader should know.
1. Stock / Share
A stock (or share) represents a portion of ownership in a company. Buying shares allows you to participate in the company’s profits and growth.
2. Bull Market & Bear Market
- Bull Market: A period when stock prices are rising and investor confidence is high.
- Bear Market: A period of declining stock prices and market pessimism.
3. Market Orders & Limit Orders
- Market Order: A request to buy or sell a stock immediately at the current price.
- Limit Order: An order to buy or sell a stock at a specific price or better.
4. Bid & Ask Price
- Bid Price: The highest price a buyer is willing to pay for a stock.
- Ask Price: The lowest price a seller is willing to accept.
5. Volume & Liquidity
- Volume: The number of shares traded during a specific period.
- Liquidity: How easily a stock can be bought or sold without affecting its price.
6. Dividend
A dividend is a portion of a company’s profits distributed to shareholders. It’s a way to earn passive income from your investments.
7. IPO (Initial Public Offering)
An IPO occurs when a private company offers its shares to the public for the first time. It’s a way for companies to raise capital.
8. Indices
Stock indices like Nifty 50 or Sensex track the performance of a group of selected stocks, providing an overall market snapshot.
Conclusion
Familiarity with these stock market terms is the first step for any beginner looking to trade confidently. As you continue learning, you’ll be able to understand charts, trading signals, and market news more effectively. At ArthVed 9X, we aim to simplify trading for beginners, helping you build a strong foundation for long-term success.
