Training in trading terminology
Guest Author Nov 28,IST Young individuals who have the interest and the enthusiasm for stock trading usually lack the basic domain knowledge of the market.
Before you go out into too many technicalities, here is a little glossary with few key terminologies that you should know before you start investing in the trade market. Basic Terminologies Of Stock Market 1. Agent: A brokerage firm is said to be an agent when it acts on behalf of the client in buying or purchasing of shares. At no point of time in the entire transaction the agent will own the shares. Assets: Everything the company owns on its name, including the cash, equipments, land, technology etc.
Advertisement 4. At the money: A situation at which training in trading terminology options strike price is identical to the price of the underlying securities. Options trading activity tends to be high when options are at the money. Bear Market : A market in which stock prices are training in trading terminology consistently. Beta: It is a measurement of relationship between stock price training in trading terminology any particular stock and the movement of whole market.
Bid: It is the highest price a buyer is willing to pay for a stock. Blue Chip Stock: Stocks of large, well-established and financially-sound companies which hold a record of consistently increasing rate of paying the dividends over decades to its stock holders.
- Followers Weighting - Trading Terminology Portfolio weight is the percentage composition of a particular security in a portfolio.
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Blue chip stocks typically have a market capitalization in thousands of crores. Board Lot: A standard trading unit as defined by the particular exchange board. Board lot size usually depends on the per share price. Common board lot size are 50, units. Advertisement Bonds: It is promissory note issued by companies or government to its buyers. It speaks about the specified amount held for a specified time period by the buyer.
Book: An electronic record of managing all the pending buy and sell orders of particular stocks. But they charge a commission for their service.
Common Trading Terms and Definitions
Bull Market: A market in which the stock price are increasing consistently. Business Day: Monday to Friday, excluding public holidays. Call Option: An option that is given to investor the right but not obligation to buy a particular stock at a specified price within a specified time period.
Close Price: The final price at which the stock is training in trading terminology on a given particular trading day. Commodities: Product used for commerce that are traded on a separate, authorized commodities platform. Commodities include agricultural products and natural resources. Convertible Securities: A security bonds, debentures, preferred stocks by an issuer that can be converted into other securities of that issuer are known as convertible securities.
The conversion usually occurs at the option of the holder, but training in trading terminology may occur at the option of the issuer. Debentures: A type of debt instrument that is not secured by physical assets or collateral.
Debentures are backed only by the general creditworthiness training in trading terminology reputation of the issuer.
A debenture is an unsecured form of investment. Defensive Stock: A training in trading terminology that provides a constant dividends and stable earnings even in the periods of economic downturn i.
Delta: The ratio that compares the change in the price of the underlying asset to the corresponding change in the price of a derivative. Sometimes referred to as the hedge ratio. It has a range from 0 to 1.
Derivatives: A security whose price is earnings on the Internet on bitcoins from one or more underlying assets.
The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Diversification: Reducing the investment risk by purchasing shares of different companies operating in different sectors. It is usually declared as a percentage of current share price or some specified INR value, usually decided by the board of directors of the company. Equity: Common and preferred stocks, which represents shares in the ownership of a company.
Face value: It is the cash denomination or the amount of money the holder of the individual security going to earn from the issuer of the security at the time of maturity.
Syllabus - What you will learn from this course
It is also known as par value. Hedge: A strategy or an attempt in reducing the risk of adverse price movements of assets. Income Stock: A security which has a solid record of dividend payments and offers the dividend higher than the common stocks.
Index: A statistical measurement of change in the economy or security market. Indices have their own calculation methodology and are usually measured as a percentage change in the base value over the time. IPOs are issued by smaller, younger companies seeking funds for expansion and growth, but large companies also practice this to become publicly traded companies.
Internet Trading: Internet Trading is a platform with Internet as a medium. Internet trading execution takes place through order routing system, which will rout traders order to exchange trading system. Thus traders sitting in any part of the world can be able to trade using their brokers Internet Trading System.
Limit Order: An order to buy or sell a share at a specified price. The order will be executed only at the specified limit price or even better. A limit training in trading terminology sets a minimum price the seller is willing to accept and maximum price the buyer is willing to pay for it. Listed Stocks: The shares of an issuer that are traded on the stock exchange. The issuer has to pay fees to be listed in the stock exchange and abide by the regulations of the stock exchange to maintain listing privilege.
It is calculated by multiplying all the outstanding shares with the current market price of one share. Mutual Fund: A pool of money managed by experts by investing in stocks, bonds and other securities with the objective of improving their savings. These experts will create a diversified training in trading terminology from these funds. Odd Lot: A number of shares which are less than or greater than but not equal to the board lot size.
For example, if the board lot size is shares, an odd lot would be 95 or shares.
Stock Market Terminology Every Trader Must Know
Usually odd lots are difficult for trading and it is not accepted easily in the market. One-sided Market: A market that has only potential sellers or only potential buyers but not both. For put options, this means the stock price is above the strike price. Portfolio: Holding training in trading terminology any individual or institution.
A portfolio may include various type of securities of different companies operating in different sectors. Positions Limit: Maximum number of futures and options contract that any individual investor can hold at any given point of time.
Pre-opening Session: The pre-open session is for duration of 15 minutes i. In pre-open session order entry, modification and cancelation takes place.
Stock Market Terminology: A Beginner’s Guide To Stock Trading
Put Option: An option that is given to investor the right to sell a particular stock at a stated price within a specified time period.
Put option is purchased by those who believe that particular stock price is going to fall down than the stated price.
- About this Course 82, recent views The purpose of this course is to equip you with the knowledge required to comprehend the financial statements of a company and understand the various transactions that take place in the stock market so that you can replicate the strategies discovered by the extant academic literature.
- F First Notice Day According to Chicago Board of Trade rules, the first day on which a notice of intent to deliver a commodity in fulfillment of a given month's futures contract can be made by the clearinghouse to a buyer.
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Risk:A probable chances of investments actual returns will be reduced then as calculated. Risk is usually measured by calculating the standard deviation of the historical price returns. Standard deviation is directly proportional to the degree of risk associated.