Jargons used in stock market.

Jargons used in stock market

Common Jaron used in Stock Market

Before starting investing you should know some of the common market concepts and terminologies associated with it.

• Bull Market- If you believe that the stock prices are likely to move up then you are bullish on the stock price. And if you see the market index is moving up during a particular time then it is said to be as a bull market.

• Bear market- if you believe that the stock prices are likely to go down then you are bearish on the stock price. And if you see the market index is moving down during a particular time then it is said to be a bear market.

• Trend- Trend is just a terminology where it shows just the strength of the movement. For example, if the markets are moving up then it is called a bullish trend and if the market is trading plat with no movement then the trend is said to be sidewise.

• 52 week high/low - 52 week high is the highest point at which the stock has traded in the last 52 weeks (a year) in the market. Similarly, 52 week low is the lowest point at which the stock has traded in the last 52 weeks (a year) in the market. Many people believe that if the stock has reached 52 week high it indicates a bullish trend and if it reaches 52 week low then it indicates a bearish trend.

• All-time high/low -  It is similar to the 52 week high/low but here the only difference is that here if it reaches all-time high then it will be the highest trading price of that stock has ever traded from the time it got listed. Similarly, All-time low is the lowest point touched by the stock has ever touched. 

• Face value of a stock -  The face value (FV) or par value of a share is the fixed denomination of a share. It is important with regards to a corporate action. Usually, when dividend or stock splits are announced they are issued with respect to the face value. For example, the face value of TCS is 5 and if they announce an annual dividend of Rs 63/- then it means the dividend paid is 1260% (63 divided by 5).

• Upper circuit/ Lower circuit -  It is a price band which is set by the stock exchange at which the stock can be traded on a particular day. The highest price the stock can reach on a day is the upper circuit limit and the lowest price the stock can reach is the lower circuit limit. The limit of the stock is selected at 2%, 3%, 5% and 20% based on the exchange's selection criteria. It is set to control the price volatility when a stock reacts to particular news related to the company.

• Long position - It is simply a reference to the direction of your trade. For example, if you are going to buy or bought a share of TCS then you are said to go long on TCS. And if you are expecting that the price is going to increase and you are buying it you have a long position on TCS. If you are long on a stock then you are bullish.

• Short position - Going shot or shorting is simply a transaction carried out in a particular order. The concept is a bit complex, look at this example:

Let us assume that One plus recently launched one of its product at a speculated price of 30000 in India and will be exclusively sold by Amazon. Now if someone wishes to buy the product then they must be registered Amazon customers, the product was not available for non-register users, and the product was open to order for a very short period. Now say Raj had ordered the product and Aman couldn't. So Aman came to Raj and told that he is willing to pay ₹34000 for the product. Since the price was believed to be around ₹30,000 so Raj agreed and took ₹34000 from Aman and told him that when he takes the delivery then he would give the product to him. Now, if the product launches at ₹30,000 or less than ₹34,000 then he wild makes a profit but if it launches at more than ₹34000 then he would make a loss. So if you look at the sequence of the transaction, first Raj sold the phone that he didn't own, then he bought the phone from Amazon and later delivery it to Aman. So in simple terms first you buy the stock and then you sell it and the difference you make tells if you have done profit or loss on that particular trade. ( But in the actual market, you are borrowing the share from someone else.)

• Square off- It is the term used to describe that you wanted to close your existing position. If you are long on the stock then squaring off simply means selling the stock. And if you are short on the stock then it means you are buying the stock back. Note that if you are squaring off in shorting it simply means to buy the stock back to close the existing position and not going long.

• Intraday position - It is simply a type of trading position where you square off your position within the same day.

• Volume- volume is the total number of transactions that takes on a single trading day ( both buy and sell put together). For example, the volume of TCS on 17th August was 6,22,319 shares. 

• OHLC - It stands for Open, High, Low, Close. It simply means the Opening price of a particular stock on a given trading day, the highest price the stock reached on that day, the Lowest price touched by the stock on that day and Closing price of the stock i.e the price at which the stock closed on that day.

~By Suddha