If you follow business news channels or read articles then you might see or hear the stock market terms like share, broker, etc. And you must be wondering what are they? Especially if you’re a beginner then knowing these terms can gain your financial knowledge.
Here are some 10 stock market terms you must know.
Shares represent ownership rights in companies. When you buy a share of a company then you become a partial owner of that company. While you’re the owner(partial owner) of a company then you are liable for the company’s profit and losses.
There are two ways to earn money in shares:
1) Companies share price appreciation; for example, suppose you bought one share of ABC at Rs.100, in a month its price went to 120 and you sell it. So whatever excess of your bought price is your capital appreciation.
2) Dividends; When a company makes a profit sometimes they decide to share this profit with shareholders that attributable profit is called dividends.
Stock Exchange is where investors or traders come to buy and sell stocks of the public listed company. You can’t buy or sell stocks directly to the stock exchange. You need a broker to trade on behalf of you.
A stockbroker is a middleman between the stock exchange and investors or traders who facilitate the transfer of funds or shares for a fee. Brokers also facilitate the trade between sellers and buyers.
A Demat account is an electronic account that helps investors to hold shares and securities. When you buy shares of a company it’s held in electronic format through the Demat account.
The ask is the lowest price that seller is willing to pay per share. it also referred to as the offer price.
The bid is the highest price that buyer is willing to pay per share. A bid is an offer made by traders or investors to buy a share.
When you own a piece of a company then you’re a stockholder. In short, someone who holds a share in an entity/company.
Intraday trading means buying and selling shares during the same business hours/day. It is also known as day trading. Traders use intraday trading because to earn short-term profit. By doing long or short trade.
A portfolio is an investor’s collection of its investments like stocks, bonds, notes, etc. If you have various stocks in your portfolio it’s also considered a portfolio.
An order is an instruction the investors give to the broker to buy or sell shares. There are various types of orders in the market that you must know. Read—Types of order in the stock market blog to know more about it.
There are also lots of terms in the stock market but these 10 are the most basic you must know. Knowing stock market terms makes you knowledgeable. For knowing more about the stock market, investments, company analysis consider following beastinvestor blog.