10 Stock Trading Terms Every Trader Should Know
It is said that it is never too early to start investing. If you haven’t started investing already, the best time to start investing is today. Investment is important to accomplish financial goals and it also helps in creating funds for unforeseen expenses that might arise. It is also a great way to grow assets that you already own. Stock markets are one great way of making investments. But before someone starts investing in stocks, they should get familiar with some basic stock market terms so that one can understand the basic mechanism of the stock market. These terms are the foundation of stock market investments. One needs a strong foundation to build a strong portfolio.
When someone starts investing they do some research and talk to people who have been investing. Chances are that they come across several stock market related terminologies.One shouldn’t be ignorant of these terms. Here are some stock market terms that you must know if you want to be a successful trader.
- Stocks (स्टॉक्स) & Shares (शेयर) – Stocks are a type of security that represent the ownership of an organization/company. A stock certificate is considered as a proof of ownership.Companies issue stocks to investors when they want to raise capitals. A share on the other hand represents the portion of ownership in a company. Stocks are divided into shares. A share is the smallest denomination of a company’s stock.
- BSE – BSE is an acronym for Bombay Stock Exchange. It has been operational since 1875 is the oldest stock exchange in India and Asia.
- NSE – NSE is the short form of National Stock Exchange. It was founded in 1972. Although it was founded much later than BSE, it is the most popular stock exchange in India and is also popular around the world.
- Nifty – Nifty also known as Nifty 50 is the market index used by NSE. It stands for National Stock Exchange Fifty. It is a benchmark based index that showcases the top 50 equity stocks traded in the stock exchange.
- Sensex (सेंसेक्स) – Sensex is also known as Sensex 30. It is the market index used by Bombay Stock Exchange. Sensex is a combination of two words ‘sensitive’ & ‘index’. Sensex comprises the 30 largest and most actively traded stocks on BSE to measure India’s economy. It is used to observe the overall growth and fluctuations in the Indian economy.
- Demat Account – A Demat or Dematerialised account is a digital account that is used to store all the information related to stock holdings and securities of an individual. It is mandatory to have a demat account if you wish to invest in stocks. It can be used to store a variety of investments like ETFs, mutual funds, debt securities, bonds, etc. All Demat accounts in India are handled by National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
- Market (मार्केट) – A market is defined as a place where two parties (typically a buyer & a seller) can come together to facilitate exchange. When referring to the stock market, the market refers to a place where securities are traded.
- Portfolio – A portfolio is a collection of investments made by an investor. A portfolio can have multiple varieties of investments like shares, bonds, futures, options, etc.
- SEBI – SEBI is an acronym for Securities Exchange Board of India. It is the regulator who supervises the Indian stock market. It ensures the effective functioning of the stock market and tries to eliminate any hindrance.
- Dividend – Dividend is a portion of the company that is to be paid to the shareholders in proportion to the amount they invested in the shares, after a given period of time.