Stock Market Terminology for Beginners

Stock market is a very common place to make money in every country. If you are a newbie in this market, you need to study and learn a lot of things. The more you will learn the more you will bring effectiveness in your trading or investment strategies.

Before learning the detail and achieve in depth knowledge on stock market, it is very important that you know the basic stock market terms. It will help you to a great extent. With that purpose, I created a list of words associated with stock exchange and their meanings.

Stock market terminology for beginners presents a collection of terms on the stock market for the beginners. The terms have been organized by the alphabetic order. If you want to find any specific term, search it by the first alphabet. However, the whole list is recommended for everyone to learn.

Stock Market Terminology for Beginners

Accumulation – when the price does not move much, volatility is very low, and stock is worthy of collecting.

Annual Report – Annual report is a report on a company’s overall performance of a given year. It shows what the company did throughout the previous year.

Annual General Meeting – A meeting is held annually among the directors and shareholders to take important decision for the company.

Assets – the property plant etc. held and utilized by the company to make a profit.

Bearish Trend – when the price of a stock is in the depreciation and is following a downward trend, it is called a bearish trend.

Book Value – The value of the asset according to the balance sheet of the company.

Buy Order – an order is placed by a trader to purchase a stock.

Buy/Sell Commission – a percentage a trade has to pay to the broker for taking trading facility from the broker.

Bullish Trend – when the price of a stock is in the appreciation and is following an upward trend, it is called bullish trend.

Blue-Chip stock – a stock of a financially sound company.

Bullish Stock – when a stock forms a bullish trend.

Bearish Stock – when a stock forms a bearish trend.

Cash Flow Statement – Shows the cash outflow and inflow of a company.

Call Option – the right to buy at a later time at a specific price.

Coupon Rate – an amount of money paid to the bond holders in every period until the maturity of the bond

Cash Dividend – dividend as a form of money.

Company – an individual entity being traded in the stock market

Distribution – when the stocks are distributed at a higher price.

Dividend – The cash or stock payment that is paid to the investors from the profit.

EPS (Earning per Share) – this is how much money a company earned against each of the shares.

Financial Reports – Shows financial performance of a given year.

Fundamental Analysis – Working with the financial information of a company, an industry, and macroeconomic factors by which the financial performance is measured.

Industry Analysis – Doing the analysis of an industry to know the current condition and to predict the future changes. The tools are PESTLE, porter’s 5 Forces etc.

Liabilities – when people have a claim on the asset of the company.

Market Index – it is the total value of all the stocks listed in the stock market.

Markup – when the price of the stock is upward

Markdown – the down phase where correction of price takes place (Technical Analysis).

Market Value – the current or last traded price of a stock

Margin Account – the account used for taking a loan to invest in stock market.

Owner’s Equity – the portion of the total asset financed by the money of the owner of the company

Price Appreciation – The price of a stock increases.

Price Depreciation – The price of a stock decreases.

PESTLE Analysis – a tool for conducting industry analysis

Right Share Issue – Company issues new share in the form of public offering against its authorized capital.

RPO (Re-Public Offering) – Re-issuing share of an existing company.

Stock Dividend – dividend as a form of stock.

Stock Splits – Splitting the face value and making smaller parts.

Stock – a tiny portion of a company’s ownership.

Stock Market – a place where traders and investors are given facilities to buy\sell stocks of different companies.

SWOT Analysis – The acronym strength, weakness, opportunities, and threats. It is a tool for performing fundamental analysis.

Stock Broker – the person or institution helps to execute or fetch the trade

Stock Exchange – where the stocks of the companies are exchanged among the traders

Securities and Exchange Commission – or SEC is created by the government of a country with goals of maintaining fair, protecting investors, and orderly functioning of the stock market.

Sell Order – an order is placed by a trader to sell a stock

Trading – to trade a stock; in a trade, a stock is bought and a stock is sold. In stock market, the word trading means purchasing, holding the stock for a very short period of time, and then sell it.

Trading Hours – the portion of a day when the trading of stocks take place.

Technical Analysis – Analysis of stocks where historical data is used to predict the future movement of a stock.

Ticker – it is a symbol (usually letters) that represents a particular security listed in a stock exchange.

Put Option – the right to sell at later time at a specific price

Volatility – the fluctuation of stock price

 

The stock market vocabularies above have listed a basic list of stock market terminology for beginners. The list should be studied with utmost importance as these will be the foundation of studying capital market.

If you have finished studying the terminology, you are recommended to study the beginners’ guide on how to invest in DSEX. It is a very basic. It will give you a concept on how to select an investment-worthy company.


Recommended Readings:

  1. Share Market Basics for Beginners
  2. Small Business Ideas in India
  3. Top Features of a Stock Market
  4. Features of Preferred Stocks
  5. Features of Common Stocks

faizul

Sheikh Faizul Haque, the founder of GotAbout, graduated from North South University, Bangladesh. His major was Finance and Accounting. Faizul has been writing in business blogs since 2013, also has a strong interest in Behavioral Finance, Risk Management, and Portfolio Management.