Stock Market Terminology

Financial Glossary: A — Z

You can probably skip this if you've taken an introductory economics course in college or read a basic economics textbook. Continue reading if you wish to freshen up on basic economic concepts.

We're curious about what various economic terms and concepts mean and how they affect us. So, we've compiled a list of 101+ Economics concepts that everyone should know. So let's begin—

A B C D E F G H I J
K L M N O P Q R S T
U V W X Y Z

Stock Market Crash Vs Bear Market

The distinction between the two is based on speed (how quickly the declines occur) and length (how long they last).
Stock market crashes are quick and short, whereas bear markets are slow and prolonged. Those two do not always occur in the same decline.

Broker

A broker is an individual or firm that executes 'buy' and 'sell' orders for an investor in exchange for a fee or commission. A mortgage broker, for example, buys and sells mortgages. An insurance broker, for example, arranges for the selling of insurance products to clients.

The term brokerage firm usually refers to a stock brokerage firm. Brokers frequently provide recommendations to their clients about what to purchase and sell, but the client ultimately makes the decision to buy or sell.

Earnings Per Share

Earnings per share is calculated by dividing a company's net profit by the number of outstanding shares of common stock.

Earnings per share serves as an indicator of a company's profitability. In simple words, it indicates how much money it makes for each share of stock it owns. Watch On YouTube

Capital Gain

Capital gain is an economic concept that refers to the profit made on the sale of an asset that has increased in value over the holding period. Capital gain is generally calculated through taking the sale price of an asset and subtracting its base cost and any incurred expenses. Watch On YouTube

Poison Pill Strategy

Poison pill strategy, developed in the 1980's, is designed to block an investor from accumulating a majority stake in a company and taking control of that company.

When a purchasing organization obtains a certain percentage of a company's shares, a poison pill is "triggered." Traditionally, poison pills are triggered when a hostile buyer obtains between 7% and 20% of the shares. Watch On YouTube

Demat Vs Saving Vs Trading Account

The purpose of the Demat account is to store the shares.

The purpose of a Saving account is to store the money or to transfer and receive funds.

The trading account is the account through which shares or securities are bought and sold. Watch On YouTube

FAIR VALUE OF PRICE

The area where neither buyers nor sellers are interested to enter into the market is called as a fair value of price.

At fair value of price the market has met its purpose to facilitate trading between buyers and sellers i.e demand equals to supply. Watch On YouTube

Areas of Personal Finance

  • There are several aspects to personal finance, they easily fit into one of five categories:
    • Income
    • Spending
    • Savings
    • Investing
    • Protection
Watch On YouTube

Descending Triangle

A descending triangle is a bearish chart pattern created in technical analysis by connecting a series of lower highs with one trend line and a series of lows with a second horizontal trend line. Watch On YouTube

HOD

High of Day ( nHOD = new High of the Day )

LOD

Low of Day (nLOD = new Low of the Day)

AON

All or none : An order to purchase or sell a stock that must be filled in its whole or it will not be filled at all. The order will not be completed if all shares are not available at the same moment and at your limit price or greater.

EOD

End of Day

FOK

Fill or Kill : An order to purchase or sell a stock that must be performed in full amount right away or the order will be canceled; no partial fulfillments are permitted.

IOC

Immediate or Cancel : An order to purchase or sell a stock that must be performed promptly and cancel any unfilled portion.If the whole order is not available, partial fulfillments are allowed.

E/R

Earnings Report

R/R

Risk/Reward

S/R

Support/Resistance

O/N

OverNight

Ceiling

A word used to describe a horizontal upper resistance line. Also known as a resistance level. For a ceiling to be valid, the touches of two or more price high are required.

Stock Buyback

When a company purchases its own share on the secondary market, is called a Stock Buyback.

Top Line And Bottom Line

The company's top line represents its turnover, while the bottom line represents its profit.

Gap Up

Let's say the opening price of a stock or any financial instrument is higher than the previous day's closing price then this situation is called a Gap Up opening.

Gap Down

Let's say the opening price of a stock or any financial instrument is lower than the previous day's closing price then this situation is called a Gap Down opening.



Volume

The total number of shares / securities exchanged (bought and sold) during a trading day or a specific period of time is referred to as volume.

Market Capitalization

It is estimated by multiplying the total number of outstanding shares of a company by the current market price per share.

Free float market cap

It is estimated by multiplying the total number of shares freely floating by the current market price per share.
*freely floating = shares that are available for general trade.

Long term capital gain (LTCG)

If you buy and hold shares for more than a year and then sell them for a profit, then it is known as Long term capital gain.

Lot size

It is the smallest number of shares that can be bought or sold, as well as multiples of that amount.

Promoters

A promoter is someone who starts a business with a certain goal in mind and then takes the measures necessary to achieve that goal.

Par value

A security's nominal face value.

Bid Price

The specific at which a buyer wants to buy the shares is called Bid Price.

Ask Price

The specific price at which a seller wants to sell its shares is called Ask price.

Dividend

The dividend received by shareholders from a portion of a company's profit as an income of the shareholders.

Types of stocks

  • The major types of stocks that you should know as a investor are:
    1. Common stocks
    2. Preferred stocks
    3. Value stocks
    4. IPO stocks
    5. Growth stocks
    6. Income stocks
    7. Domestic stock
    8. Small-cap stocks
    9. Mid-cap stocks
    10. Large-cap stocks
    11. Dividend stocks
    12. Non-Dividend stocks
    13. Blue chip stocks
    14. Penny stocks

Auction

When a seller is unable to deliver the securities he has sold, the buyer submits a buying-in application, which allows the securities to be purchased from the market and delivered to him. Auction is the term used for the process of purchasing securities on behalf of a defaulter (seller).

Beta

By calculating beta, you can measure the stock's volatility with respect to the broader market (index).
If a stock "PQR" has a beta of 2.5, it indicates that for every 1 point change in the market, stock "PQR" moves 2.5 points and vice versa. Stocks with a high beta have a higher risk but a higher return, whereas low beta stocks have a lower risk but a lower return.



Circuit breaker

When the stock market index jumps or falls by more than a predetermined percentage, the Stock Exchange authorities implement a procedure to prevent excessive speculation. Trading is then postponed by the authorities for a period of time to allow the market to settle down.

Disclosure

A company provides complete and relevant information that may help an investor to make an informed financial decision. The process of providing facts by the company is known as Disclosure.

Lame Duck

A defaulter who cannot keep his commitments is called a Lame Duck.

Dematerialization

If someone converts his/her physical paper share into Demat share then the process of this conversion is known as Dematerialization.

Strike price

In contracts for put and call options, the price at which the option can be executed. The exercise price is also referred to as the basis price.

Short covering

A seller buying stocks in order to fulfill his prior commitments.

SEC (US)

Securities and Exchange Commission (SEC), the US Government agency that enforces insider trading rules in the USA.

Rigged market

Manipulation of share prices in an attempt to attract buyers and sellers to the riggers' benefit.

Ruling Price

A security's current market value.

Leverage

If someone borrowed money and use that money to finance an investment.

Liquidation

Conversion shares into cash are known as Liquidation.

Maturity (Date)

The date when a loan, bond, or debenture is due to be paid.

Merger

Mergers bring together two independent firms to form a new legal entity.

Breadth of the Market

The number of securities listed on the market in which there is regular trading.

Break

A security or index that has experienced a sudden and dramatic drop.

Junk Bond

High yield bond issued by low rated companies.

Leading indicators

An indicator that might predict future success. A leading indicator forecasts future outcomes and events.

Limit Order

When a specific price is reached, an order to purchase or sell a given number of shares of a securities is placed.

Liquidation

The conversion of stocks into cash. Also refers to the dissolution of a business.

Proxy

At a company meeting, someone who votes for and on behalf of a shareholder.

Redemption Price

When a bond is redeemed, the price at which it is redeemed is called the redemption price.

Rigged Market

Manipulation of share price to attract buyers and sellers to the riggers advantage.

Further Public Offer (FPO)

When a publicly traded company announces a new round of funding, it is referred to as an FPO.

Merchant Banker

A merchant banker acts as a single point of contact for the whole IPO process. A merchant bank usually has two main roles. Eg. Mergers & Acquisitions, Fundraising

Block deal

A block deal is a transaction in which a large number of shares are exchanged.

Shares Auction

If a short seller does not square off his position, his shares are auctioned off. Brokers participate in the auction market on behalf of their clients during post-market hours.
Any loss incurred as a result of such a transaction will be borne by the short seller, while any profit will be transferred to the IEPF (Investors Education and Protection Fund)

Breakout

When a stock or commodity exits an area pattern.

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