Stock Market terms
The stock market is the place where different companies are listed. Based on the company’s core business, balance sheets, and financial report one can decide trade.
Shares buying and selling is placed via stock exchanges. The stock exchange is the place where buyers and sellers meet and in the virtual online world to work together. These buyers and sellers then decide which security they want to place for trade either they will place buy orders or sell orders.
Stock trading falls into two categories of market,
The primary market is a market where company shares are produced and those shares are available to purchase via company to investor directly. Shares which are produced first time and available to purchase directly from the company are referred as IPO.
The secondary market is the market where shares are available for investors to trade after issuing an IPO. The secondary market is the market which is preferred by an investor to trade. When we talk about the stock market or share market, we are usually talking about the secondary market.
Popular terms in the stock market
Open – This is the first price at which stock opens when the market starts.
High – This is the highest price when the stock price reached at the highest price within the day.
Low – This is the highest price when the stock price reached at the highest price within the day.
Close – This is the stock price at the time of market close.
Volume – volume states quantity of the shares.
Bid price- buying price is called as the bid price
Offer- selling price is called offer price.
Bid quantity- the total number of shares available for buying at the time is called Bid quantity
Offer the total number of share available in the market for selling is called an offer quantity.
Buying shares- buying shares are also called as demand or bid
Selling shares- sharing shares are also called as supply or offer.
Short selling- short selling is the trading type which is usually performed by day traders. In short selling trader first, buy shares at the high price then he sells shares when the price comes to down
For example, William purchased apple share at 171 dollars then he will wait for the price to come down when share price hits at lower lever say 169 dollars then William will buy that share again. Here William gains 2 dollar profit for each share which he sold first.
Share trading: buying and selling shares for the very little span is called as share trading.
Transaction: when buying of shares and selling of shares completes then it is denoted as a transaction.
Square off: square off is the term which we always heard on television. Square off is a process of buying and sharing of shares to complete the transaction cycle.
Limit Order: share buyers can place their order at the price which they want, but the order will execute only when given price will match the current market price.
Market order: Market order is the price of the stock at which trade gets executed
For example, William is placing the buy order for Apple share at market price then his order will instantly get executed because he is placing his order at market price. Whereas sell order is the order at which trader is selling his holding at the current market price.
Stop Loss Order: The most important terminology for any investor, trade in stock market. It is an order which is placed at the time of buying the share or after buying any share to sell. The stop-loss order will limit investor’s loss. Bought share will automatically sell when share price hits defined stop-loss price.
Advantage: stop-loss price will limit the investor’s loss.
Disadvantage: stop-loss price may get triggered when small span fluctuation takes place in the stock market.