The topic we are covering today is really a wide concept. The stock market can be quite terrifying for many, especially for beginners. In a stock market or trading app, there are terms like “Bull market,” “market orders,” or “volatility.” These terms can sound like a foreign tongue. But don’t worry, we will explain everything in this chapter of the stock market terminology for beginners.
But before we start our chapter, we need to talk about why it’s essential. An example is when one goes to explore a new city and doesn’t understand the street signs or directions. It would be pretty challenging to get around, right? Well, the same goes for the stock market or a stock trading app. When investors understand the language of the stock market, they will feel more confident while trading or investing.
Stocks and shares:
Starting this concept with the very basics: stocks and shares. These are like the infrastructure of the stock market. Stocks represent ownership in a company. They make you a shareholder with a stake in that company. And shares are units that quantify how much of this ownership you possess. For instance, if you have 100 shares, you own a certain person in the company.
When you trade in the stock market through an online trading app, you’ll encounter different order types:
- Market orders: It means you are willing to buy or sell a stock right away at its current price.
- Limit orders: With a limit order, you specify the exact cost at which you want to buy or sell a stock.
- Stop-loss orders: It is a safety measure. You set a price, and if the stock’s price drops to that level, it triggers an automatic sale.
Bulls, Bears, and Market Sentiment:
The stock market or any app for trading has its own unique bay of expressing market sentiment:
- Bull market: It refers to a period when the stock market is generally rising. Investors are optimistic, and stock prices are going up.
- Bear market: It signifies a period when stock prices are generally falling. Investors tend to be pessimistic during a bear market, and the overall trend is downward.
Volatility and Liquidity – Market Behavior:
These two more concepts you’ll frequently encounter:
- Volatility: It is about the degree of price fluctuations in the stock market. High volatility means prices change frequently and often by significant amounts, while low volatility indicates more stable and steady price movements.
- Liquidity: Liquidity is the ease with which stocks can be bought or sold without influencing their prices. High liquidity means you can easily buy or sell stocks, much like popular items on a store shelf that you can purchase without any trouble.
You have taken your first step into the fascinating world of stock market terminology. The concepts we have covered in this article are just a few parts of the stock market. But when stepping into the stock market, you need to understand these concepts very deeply. And when you continue your journey, you have to remember that learning the language of the stock market is like picking up a new skill. So keep practicing on any trading platform and move ahead.