So you are new to the stock market and need to understand how to start but got confused with stock market terminologies then you’re most welcome to read this article. This article will give you insight with some most important terminologies related to the stock market investment
Stock Market Investment
Investment is an art, it’s an art of seeing the future of a company. When we call it’s an art then we talk about the expertise and expertise that comes with knowledge and the knowledge comes with a study. Stock market investment is all about the study. Studying company balance sheet, performance sheet, Studying the historical performance data of the company, Understanding the company’s future goal and then the Stock Market Investment part comes into the picture. Let’s understand a few very basic terminologies associated with a stock market investment that might be bothering you.
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- What is Stock Market | How Share Market Works
The stockbroker is the medium through buyers and sellers place their order. A stockbroker is an individual who is associated with the brokerage firm. A stockbroker buys and sells stocks for both retail and individual clients through stock exchanges. The stockbroker offers a variety of services to their clients including market research, analysis of a stock market, stock-specific opinions, and expert advice to the client. Stockbroker holds a degree in finance to give crystal clear insight into the market to their customer.
Traditional Price Display in Stock Market
To transact in the share market, the trader should be aware of the live price of the stock. Initially, these prices were obtained via ticker tape. Ticker tape was a large ribbon of a paper on which stock prices were printed. This is the reason we refer to stock prices as a stock ticker.
How Stock Quotes are Helpful in stock exchange
A stock quote contains the essential information required to place an order in a live market. This quote contains the live price of the stock at which transactions are placing in the market. Stock quotes give information about the current bid price. The current bid price is the highest price at which someone is ready to buy the stock. Whereas the offer price is the lowest price at which someone in the market wishes to sell the stock.
The stock quote contains stock information by its symbol. This symbol contains three to four capital words. For example, Hero Motocorp Ltd is referred by HEROMOTOCO. The stock quote contains a chart that represents a stock historical price. The stock quote also gives the last traded value of stock including fifty-two weeks high value and fifty-two weeks the low value of a stock.
What is the Role of Market Order
Traders place their orders in the live market by filling market orders. The market order is a simple order form that instructs the broker to place trader orders i.e. buying and selling the share at the available price for selected equity. A market order does not give a guarantee of an order placed by trader until and unless it matches the market trend.
How Stock Market Investment Order Works
Traders can place a limit order via order book. Let’s take an example, the trader wishes to buy 200 quantity of a hero moto corp share at 3,729 whose market value is 3,729.50 then the trader can buy only 100 quantity of a share offered at 3,729 prices. For remaining quantity, traders need to wait until unless some other sellers come to market at an expected down price.
Place Stop Order & Prevent Losses
Stop Order is another form of order in the stock market. Stop order is also named as the stop-loss order which will cover losses of a trader. Stop order will get triggered only when the stock reaches to the quoted price. Once the stock reaches to given price then pre-order turns into the market order and gets executed.
- Let’s see one example, if the trader is buying hero motocorp share at 3,729 and he placed one sell order by quoting price at 3850 then in this scenario his order will get executed only when the stock reaches to the given price.
Margin trading is another form of trading in the stock market. Margin trading stock broker facilitates its client to borrow money to buy shares in the excess amount of cash. Margin trading is facilitated by multiple brokers. Brokers attract new customer and their existing clients by offering margin trading.
Short selling is a type of order, trader executes in the live market hoping stock price will drastically go down.
- Let’s see an example The current stock price of the hero motocorp share is 3,729 rs/- and Shyamlala expecting to see the price at 3650. In this situation, Shyam Lala will place an order to sell hero motocorp shares at the current market price. Later on, when the hero motocorp share price goes down Shyamlala will purchase share again to complete short selling order. The difference between the selling and buying price is the profit in this scenario.
Clear cut understanding of stock market investment will help you to make a lead position in profit. Make a sensible investment of your saved earnings after due diligence study. Avoid products like marginal trade to make the healthy and tense free investment.