Chapter 2 – Stock Market Jargons
Updated: Apr 10, 2021
Have you encountered the following terms related to the stock market Jargons? Well, if you do not love the stock market, you shouldn’t be worried. There are terminologies used in the stock market which a beginner should know about. You must have share market basic knowledge before entering into the share market. You must be comfortable with these different terms. So let’s talk about the basics of the stock market for the beginner: -
stock market jargons for the beginner: -
Bull Market – If we have the sentiment that stock price will go up, it means we are bullish on that stock price. Generally, when the stock prices in the share market rise, it is called a bull market.
Bear Market – If we have the sentiment that stock price will go down, it means we are bearish on that stock price. Generally, when the stock prices in the market fall, it is called a bear market.
Bid – It represents the amount that we are willing to pay for a share.
Offer – It represents the amount that we are willing to sell a share.
Order – It consists of instructions to the broker to buy or sell the shares on the behalf of the investor. For example, we have placed an order to buy 100 shares of company A at Rs. 80 per share.
Trend – It is used to know the direction of the stock market. For example, if the market goes up, the trend is said to be bullish. If it goes down, the trend is said to bearish. If the market shows no movement, the trend is said to be sideways.
Volume - Volume means the number of shares traded on a day (or) traded on a specific time of the day (or) the number of shares that changed hands.
Face value (FV) – It is the issue price of shares during the first time issue of the company to the public. It will be fixed (Minimum Rs.1). It is also known as par value or just par.
Long Position – It means we have bought and owned those shares with the expectation that they will rise in value. In layman’s terms – Buy low, sell high. A bullish attitude.
Short Position – It is the opposite of a long position. It is a technique when an investor believes that the value of a stock in Stock Market will decrease in short term, perhaps in the next few days or weeks. Investors who sell short believe the price of the share will decrease in value. If the price goes down, they can buy the stock at a lower price and make a profit.
52 week high/low – It is the highest or lowest price at which a stock has traded during the last 52 weeks that equates to one year. It is based on the daily closing price for the stock.
Upper Circuit/Lower Circuit – Upper circuit is the maximum price to which a stock is allowed to move upwards. Similarly, the lower circuit is the minimum price to which a stock is allowed to fall downwards. The stock exchange places these restrictions to control excessive volatility.
Book Value – It is the difference between the company’s total assets and total liabilities. It means that the shareholders will receive that much amount per share if a company is liquidated as of date.