A Guide to Stock Market Jargons

A Guide to Stock Market Jargons

Here are 50 stock market jargons that you need to know.

If you want to invest as an expat or high-net-worth individual, which is what i specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).

Introduction

Young people who are interested in stock trading and are enthusiastic about it sometimes lack fundamental market expertise. Although trading may not demand a lot of time or money, it is still vital to have some basic tools and training in order to make the best selections. Before you go too deep into the details, here’s a quick dictionary of some crucial terms to know before you start investing in the stock market.

50 Stock Market Jargons

  1. Agent: When a brokerage business works on behalf of a customer in the purchase or sale of securities, it is referred to as an agent. The shares will not be owned by the agency at any stage throughout the transaction.
  2. Ask/Offer: The lowest price at which a stock owner is willing to sell it.
  3. Assets: Everything a business holds in its name, such as cash, equipment, land, technology, and so on, and which represents the firm’s overall wealth.
  4. At the money: When the strike price of an option matches the price of the underlying assets, it is said to be “at the money.” When options are in the money, option trading activity is often significant.
  5. Bear Market: It is defined as one in which stock values continually decrease.
  6. Beta: It is a metric that measures the link between a stock’s price and the market’s overall movement.
  7. Bid: The greatest price a buyer is ready to pay for a stock is known as the bid. It is the inverse of ask/offer.
  8. Blue Chip Stock: Stocks of big, well-established, and financially solid corporations that have a track record of continuously raising the rate at which dividends are paid to stockholders over decades. The market capitalisation of blue chip stocks is often measured in hundreds of crores.
  9. Board Lot: A standardized trading unit as established by the exchange board in question. The size of a board lot is normally determined by the price per share. 50, 100, 500, and 1000 pieces are common board lot sizes.
  10. Bonds: A type of promissory note that is issued by firms or governments to its investors. It refers to the buyer’s holding of a specific quantity for a specific period of time.
  11. Book: A computerized record of all pending purchase and sell orders for certain stocks.
  12. Brokerage Firm: A broker/brokerage firm is a registered securities firm. Brokers serve as advisors for the purchase and sale of listed stocks; however, they do not hold the securities at any time. They do, however, demand a fee for their services.
  13. Bull Market: A bull market is one in which stock prices continually rise.
  14. Business Day: Monday through Friday (excluding holidays).
  15. Call Option: An option that gives an investor the right, but not the duty, to buy a certain stock at a specific price within a certain time period.
  16. Close Price: The last price at which a stock is traded on a given trading day.
  17. Commodities: Commercial products that are exchanged on a separate, approved commodities market. Agricultural goods and natural resources are examples of commodities.
  18. Convertible Securities: Bonds, debentures, and preferred stocks (collectively known as security) issued by an issuer that may be converted into other securities issued by that issuer is known as a convertible security. The conversion normally happens at the holder’s request, although it can sometimes happen at the issuer’s request.
  19. Debentures: Unsecured debt instruments that are not backed by assets or property. A debenture is an unsecured investment that is solely guaranteed by the issuer’s overall creditworthiness and reputation.
  20. Defensive Company: A stock that pays consistent dividends and steady earnings even during periods of economic downturn, i.e. even in the most critical stock market scenarios, these firms continue to pay dividends at a consistent pace.
  21. Delta: A ratio that compares the price change of an underlying asset to the price change of a derivative. The hedging ratio is another name for this figure. It has a 0-to-1 range.
  22. Derivatives: A security which value is based on one or more underlying assets. Stocks, commodities, bonds, currencies, interest rates, and market indexes are the most often used underlying assets.
  23. Diversification: The process of reducing investing risk by acquiring stock in a variety of firms that operate in various industries.
  24. Dividend: A part of a company’s earnings that is chosen to be paid to its shareholders in exchange for their investment. It is often stated as a percentage of the current share price or a certain INR value, as determined by the company’s board of directors.
  25. Equity: Shares of common and preferred stock that indicate a company’s ownership.
  26. Face Value: This is the currency denomination or the amount of money that the holder of an individual security will receive from the security’s issuer when it matures. Par value is another term for it.
  27. Hedge: A technique or attempt to reduce the risk of asset price fluctuations.
  28. Income Stock: A stock that has a long history of paying dividends and pays a greater payout than ordinary equities.
  29. Index: A statistical indicator of economic or financial market change. Indices have their own methods for computation and are often expressed as a percentage change in the base value over time.
  30. Initial Public Offering (IPO): The first public offering of stock by a firm. IPOs are often issued by smaller, younger firms seeking funding for development and growth, but huge corporations may also use this strategy to become publicly listed.
  31. Internet Trading: Internet Trading is a trading platform that uses the Internet as a medium. Internet trading is carried out using an order routing system, which routes traders’ orders to exchange trading systems. As a result, traders in any region of the world may trade utilizing their broker’s Internet Trading System. In January 2000, the Securities and Exchange Board of India (SEBI) legalized Internet trading.
  32. Limit Order: A purchase or sale of a share at a predetermined price. Only the specified limit price or better will be used to execute the order. A limit order specifies the least price the seller will take and the highest price the buyer will pay for it.
  33. Listed Stocks: Stock exchange-traded shares of an issuer. To preserve listing permission, the issuer must pay fees and follow the stock exchange’s requirements.
  34. Market Capitalization: The total worth in INR of all outstanding shares of a corporation. It is computed by multiplying the total number of outstanding shares by the current market value of one share. It indicates the size of the firm in terms of wealth.
  35. Mutual Fund: A pool of money managed by professionals that invests in stocks, bonds, and other assets with the goal of increasing their savings. These money will be used by these specialists to build a diverse portfolio.
  36. Odd Lot: A number of shares that is less or higher than but not equal to the board lot size. An odd lot, for example, would be 95 or 102 shares if the board lot size is 100. Ordinary lots are typically difficult to trade and are not widely acknowledged in the market.
  37. One-sided Market: A market in which either prospective sellers or potential buyers exist, but not both.
  38. Out-of-the-Money (OTM): In the case of call options, this signifies that the stock price is lower than the strike price. This signifies that the stock price is higher than the strike price for put options. The cost of out-of-the-money options is solely determined by “time value.”
  39. Portfolio: Any individual’s or institution’s holdings. A portfolio may contain a variety of securities from several firms operating in various industries.
  40. Positions Limit: The maximum number of futures and options contracts that each one investor can possess at any particular moment.
  41. Pre-opening Session: The pre-opening session will last 15 minutes, from 9:00 AM to 9:15 AM. Order entry, modification, and cancellation take happen during the pre-open session.
  42. P/E Ratio: A comparison of a company’s last trading share price to its most recent reported 12 months earnings per share. For example, if any X business’s latest traded share price is INR 40 and its profits over the previous 12 months per share are INR 2, the P/E ratio of the X company is INR 20 (40/2).
  43. Put Option: A put option grants an investor the right to sell a certain stock at a predetermined prices during a specified time period. Put options are acquired by people who believe that the price of a certain stock will fall below the set price.
  44. Risk: The real returns on investments will be lowered if the risk is not mitigated. Risk is often quantified by analyzing the standard deviation of past price returns. The standard deviation is directly related to the degree of risk involved.
  45. Securities: A transferable certificate of ownership in items such as stocks, bonds, future contracts, and options that an individual owns.
  46. Strike Price: The price at which an option holder can buy (in the case of a call option) or sell (in the case of a put option) the securities they own when the option is exercised.
  47. Stock Split: A method of increasing the number of outstanding shares of a firm by splitting the current shares. It is frequently done to boost the market availability of shares. The typical split ratio is 2:1 or 3:1, which means that one share is divided into two or three.
  48. Thin Market: A market with a low number of purchase bids and sell offers. Prices are highly volatile since the quantity of transactions is minimal.
  49. Trading Session: From 9:15 a.m. until 3:30 p.m., both sellers and buyers may trade; all orders for the day must be submitted within this time period. All pre-opening orders are matched and performed here.
  50. Yield: A percentage-based measure of the return on investment. Divide the current share price by the yearly dividend paid by the corporation for that share to determine stock yield. For instance, if the current share price is INR 100 and the yearly dividend is INR 5, the stock yield is 5%.

Pained by financial indecision? Want to invest with Adam?

Adam is an internationally recognised author on financial matters, with over 438.5 million answers views on Quora.com and a widely sold book on Amazon

Add a comment

*Please complete all fields correctly

Related Blogs

What is Asset Correlation and Why is it Important
Pros and Cons of Investing in US Stock Market
4 Worst Performing Indian Stocks Of 2022