The Basic Jargon Of Stock Investment Platforms, Explained
Trading | by 3 | on 2020-11-06 08:50
It’s a question every newbie entering India’s stock investment platform faces. What do all these technical terms mean? If you’re not from a finance background, the terms of the stock market may as well be Greek and Latin to you. Rest assured, getting the hang of the terms involved with stock trading is not that difficult! The pros in the sector know all the terms like the back of their hand. With this guide, you can join the big leagues as well! Are you ready to familiarise yourself with the must-know jargon in India’s stock market?
Jargon means nothing if you don’t understand the mechanics behind the entire framework. This fact is especially true for the stock market in India, as it’s a high-risk, high-reward game! Even India’s largest stockbrokers play by these rules, so it pays well to know them like the back of your hand. So without further ado, let’s familiarise ourselves with the essential workings of the stock market.
– The stock market is a platform where traders deal in assets with a value attached to them, known as stocks.
– These financial assets come in different forms, each with their own sets of pros and cons. Some common examples are mutual funds, equity investments and bonds.
– The average day in a stock investment platform is quite frantic, with trades happening left, right and centre. A trade occurs when people buy or sell stocks at a particular price value. Long-term transactions are known as investments.
– Stocks rise and fall based on the simple concept of supply and demand. Doesn’t it make sense that a coveted stock will be valued at a much higher price? Many factors influence stock prices, from recessions to force majeure events. Keeping track of these fluctuations is key to your success as a stockbroker.
– To make your foray into the stock market, you have to complete the formalities of setting up a Demat account and registering with the SEBI. Nowadays, there are plenty of qualified stockbroker agencies that can guide you through the whole process from start to finish. Zebu is an eminent member of this sector!
– Your mental image of India’s largest stockbroker is probably a bunch of people in suits carrying briefcases, always on the phone. The truth is, with the advent of digital transformation, virtually all stock trades are conducted on the Web, through online stock platforms.
These points should give you a layman-friendly idea of the stock market’s core functioning. With that out of the way, it’s time to dive into the must-know jargon for every stockbroker!
The Talk Of The Trade
The Indian stock investment platforms move fast, no matter what level you occupy. Investors in the big leagues have entire teams working for them, crunching the numbers and devising the ideal plan of action for them. Every trader out there doesn’t have the same luxury, though. That’s precisely why you need the know-how to crack the formula of the stock market. After all, nothing can substitute for aptitude!
Just like any other extensive field, the stock market can also be split into particular avenues, for a better grasp on its concepts. With that in mind, let’s take a crack at each avenue’s jargon, one by one!
Stock Investment Platform: Assets
Short for Initial Public Offering, this term denotes a new pitch from a company in the market. Put simply; it is when an organisation decides to go public with its assets, welcoming investors.
You’ll hear this term floating around quite often among India’s largest stockbrokers. A stock’s capitalisation is a rough estimate of the apparent value of a stock according to the market. Note that this can vary significantly from the actual cost.
Some stocks have a steep acquisition price. With the funds available to you, you may not be able to invest in them. Calculating the spread of the market is to gauge the gap between the target stocks and the owned stocks among traders.
The dividend of a stock is the pay-off you get from the stocks that you own. In other words, it is the amount of the company’s profits that is given to its shareholders. The dividend amount of stocks can fluctuate based on market factors in the stock investment platform.
– Limit Order. In the stock market, it’s cumbersome to keep track of all the stocks you own, especially as you accumulate more. That’s where limit orders come in. With these specific orders, you can set a limit to buy or sell a stock well in advance, and never worry about the transaction going through after that.
– Average Down. This practice is common among veterans and India’s largest stockbrokers alike. Averaging down involves monitoring the stock price closely to make the purchase when the price is feasibly low. Naturally, the idea is to buy low and sell high to maximise profits!
– Day Order. This aspect is yet another popular feature in the stock market. When an organisation issues a day order on the floor, they are expressing their interest to buy shares at a particular price. As the name states, though, day orders become invalid if the trade is not completed when the business day is up. Day orders offer traders a way to test the waters with their investments.
– Portfolio: This term is self-explanatory. Put simply; your investment portfolio is the collection of the shares under your ownership at any point in time.
– Bear: When a stockbroker says bear market, he or she means that the market is expected to take a steep dive in terms of prices. Bear markets are usually predicted well in advance, to enable traders to prepare for the repercussions and safeguard their stocks.
– Bull: The bull condition is the inverse of the bear condition. Instead of prices nosediving, a bull market is a sign of share prices increasing across the board. India’s largest stockbrokers usually get ready to sell their stocks for a profit during bull markets.
– Volatility: The volatility of a share in the market is an assessment of the fluctuations it undergoes during a period.
– Stock Symbol: Remember the ticker tape signs in news channels with red and green arrows and symbols? Those symbols are stock symbols and denote specific stocks and their progress in the market. Stock symbols facilitate the process of market analytics.
1) Who are the largest brokerage firms in India?
2) How to start investing in stocks?
To get investing in the stock market, you have to open a Demat account and register with the SEBI.
3) How to invest in the share market?
To invest in the share market, consult your stockbroker regarding the market pulse and the volatility of the shares you’re eyeing.
4) What are the types of share market?
The share market undergoes many fluctuations, such as bull and bear markets. Your best bet is to consult your stockbroker to understand the types better.
A Whole New World
As you can see, there’s plenty of know-how surrounding the stock investment platforms in India. As a stockbroker, it’s in your best interest to familiarise yourself with these terms to gain an edge over the competition! If you want to become a pro at stock trading, Zebu Trade is your one-stop hub!