50 stock market jargons for traders and investors

The stock market is filled with a lot of terms and jargon and it can be overwhelming for anyone to remember all the terms and jargon, especially for someone who is just starting their trading and investing journey. The key to success in the stock market is learning and practicing, but when you go through any broker platform or read any articles, you'll find all these terms and anyone can get easily confused. That's why we'll give you a list of all the basic terms that you will encounter in your trading journey today or tomorrow and knowing these terms will surely help you to become a profitable trader or investor. Here are the 50 stock market terms or jargon for every trader and investor:

Demat Account: An account that holds securities in electronic form. A Demat account is required to buy and sell stocks in India. So whenever you buy any shares, they will be credited to your demat account.
Bear Market: When the stock market or the overall market keeps falling, basically its price keeps going down, we refer to it as a Bear market or Bearish market. Investors are in a low confidence state because the value of their shares keeps falling. One example of a bear market is covid-19 pandemic crash in 2020.
Bull Market: When the stock market or the overall market keeps growing, basically its price keeps going up, we refer to it as a Bull market or Bullish market. Investors's confidence is high because the value of their shares keeps increasing and they're getting profits. After the coronavirus pandemic, the Indian stock market recovered and saw a great bull run in 2021.
Blue-Chip Stocks: Blue chip companies are big companies that are usually the industry leaders with great business and a really good balance sheet. They have a good history of stable and reliable market performance. So it's suggested for a beginner to invest in blue-chip stocks because there are fewer chances of very big losses in these companies. RELIANCE, HDFC BANK, and ASIAN PAINTS are some of the blue-chip stocks.
Dividend: A dividend is the profit that a company shares with its shareholders. A company doesn't need to give dividends, they can either invest the profits in the business growth or share it with the shareholders in the form of dividends.
Equity: In terms of the stock market equity refers to the piece of the company in the form of the company's shares. Owning equity simply means owning a stake in the company or having shares of the company.
IPO (Initial Public Offering): When a private company decides to go public and list its shares in the stock market for the first time, this process is known as IPO.
LTP (Last Traded Price): LTP is the last traded price of a company in the stock market. When the market is open and any trade is executed with a different price than the previous LTP, we get a new LTP. So let's say the current price of any company is Rs 100 as of now and now there is a trade with Rs 101, so now the LTP of that company becomes 101.
Market Capitalization or Market Cap: Market cap tells us the total value of all a company's shares combined, showing how big or small the company is in the market. Usually, the market cap is calculated by multiplying the total no of shares of a company by its LTP.
P/E Ratio (Price-to-Earnings): This tells how much investors are willing to pay for each rupee of a company's earnings. For example, if Infosys has a P/E ratio of 27, it means investors are willing to pay ₹27 for every ₹1 of Infosys's earnings.
Portfolio: It is the collection of all the shares of an investor. Your portfolio should be properly spread to balance risk and gain.
Yield: The profits you earn from an investment in known as Yield. It is usually expressed in percentages. For example, if you receive ₹100 annually from a ₹2,000 investment, the yield is 5%.
Volatility: Volatility refers to how much and how quickly the price of a share or an asset can change. High volatility means the price moves dramatically and rapidly. Usually, Blue Chip companies are less volatile, and small cap companies are more volatile.
Liquidity: Liquidity is how easily you can buy or sell assets without affecting the market price much. A stock with high volatility is easy to buy and sell at the LTP or near price range.
Index: The index measures the performance of a group of stocks, representing a segment of the market. The Nifty 50, for example, is a stock index representing 50 major Indian companies.
Short Selling: The practice of selling borrowed stock, hoping its price will fall so you can buy it back cheaper and profit from the difference.
Margin Call: A call by a broker to deposit more money in your account to cover potential losses. This often occurs when your investment value falls below a certain level and you don't have enough balance in your account to hold your positions.
Derivative: A financial contract whose value is based on an underlying asset, like stocks, bonds, or commodities. For example, options and futures are derivatives used by traders to speculate market or hedge risks.
Futures Contract: An agreement to buy or sell something at a future date at a predetermined price. It gives you an option to buy or sell something in the later stage for a fixed price.
Option: A contract that gives you the right, but not the obligation, to buy or sell an asset at a set price before a specific date. It's like having an option to buy shares of Tata Steel at a fixed price regardless of market changes.
ETF (Exchange-Traded Fund): A type of investment fund that's traded on stock exchanges, much like stocks. ETFs often track an index, sector, commodity, or other asset. For instance, the SBI ETF Nifty 50 follows the Nifty 50 index.
Beta: It measures the stock's volatility about the overall market; a beta greater than 1 means the stock is more volatile than the market. For example, if ICICI Bank has a beta of 1.5, it's considered 50% more volatile than the market.
Bid: The highest price a buyer is willing to pay for a stock, like someone wanting to buy shares of Maruti Suzuki at a specific price, then that price is the bid price.
Ask: The lowest price at which a seller is willing to sell their stock, such as a trader wanting to sell shares of Bharti Airtel at some price, then that price is their ask price.
Spread: The difference between the bid and ask prices. This can affect the buying and selling price of stocks. When the spread becomes 0, that means the bid and ask price is the same and then the trade gets executed.
Stop Loss Order: An order placed to sell a stock when it reaches a certain price, used to limit potential losses in case the stock price falls. If you bought a share for Rs 100 and you want that if the share price goes below Rs 80, the stock should get automatically sold to prevent further loss, you place a stop loss order of Rs 80.
Day Trading: When you buy and sell stocks within the same trading day to make a profit from short-term price movements, it is known as day trading. It is not advised to start day trading if you're just starting your trading journey.
Leverage: Using borrowed money to amplify potential investment returns, like taking a loan to buy more shares in the hope of increasing profits. Also, some brokers provide leverage for your trades where you can invest less money and buy shares. For example, if you take 5x leverage, that means if you invest Rs 20, you can buy shares worth Rs 100, so if the price of a share goes up by 1%, your share value becomes Rs 101, which is Rs 1 profit on your initial Rs 20 investment and 5% profit instead of 1%. Similarly, if the price of a share goes down by 1%, you lose 5% of your initial capital instead of 1%.
Book Value: The net value of a company's assets minus liabilities, shown on its balance sheet. It reflects what the company's assets value today minus liabilities minus debts.
Bullish: If you're expecting the stock market or a particular stock to rise, like being optimistic about the future performance of the market or any particular company, you're bullish.
Bearish: If you're expecting the stock market or a particular stock to fall, like being pessimistic about the future performance of the market or any particular company, you're bearish.
Capital Gain: The profit from selling an investment at a higher price than you paid for it. For example, if you bought any share for Rs 100 and sold it at Rs 110, your capital gain is Rs 10 which is Rs 110 - Rs 100.
Depreciation: The decrease in the value of an asset over time, often used for accounting and tax purposes.
Diversification: The strategy of spreading investments across various financial instruments to reduce risk, like investing in both stocks and bonds instead of just one type. Or investing in all large-cap, mid-cap, and small-cap companies. Or investing in different sectors, so that if any particular sector is not doing well or falling, shares of other sectors in your portfolio will still perform.
Earnings Per Share (EPS): The portion of a company's profit allocated to each outstanding share, indicating the company's profitability. A high EPS suggests it's doing well financially.
Equity Market: The market where shares of publicly traded companies are bought and sold, like the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) in India.
Financial Statement: A record showing a company's financial performance and position, including its income statement, balance sheet, and cash flow statement, providing insight into companies.
Gross Domestic Product (GDP): The total value of all goods and services produced in a country, reflecting the size and health of its economy. For example, India's GDP in the year 2021 was more than 3 Trillion Dollars.
Hedge: An investment made to reduce the risk of unfavorable price movements in an asset. For example, using derivatives to protect against losses in stock investments.
Insider Trading: Illegal buying or selling of a publicly traded company's stock by someone with access to non-public information about the company.
Market Order: An order to buy or sell a stock immediately at the current market price, ensuring quick execution. Placing a market order in an illiquid stock can be risky as the price can vary from LTP a lot and you won't be sure at what price your order will be executed.
Limit Order: An order to buy or sell a stock at a certain price or better. Placing a limit order in an illiquid stock can be helpful as you're sure that the price at which the order will be executed will be either the same or better. For example, if the LTP of a company is Rs 100 and you place a BUY order of Rs 95, the order will be executed if the price comes to 95 or below and won't be executed for a price more than 95.
Net Income: The total profit of a company after all expenses and taxes have been deducted, showing how much it earned.
Over-the-counter (OTC): Trading of financial instruments directly between parties without a central exchange, like bond transactions or off-exchange derivatives.
Recession: A period of temporary economic decline during which trade and industrial activities are reduced, usually identified by a fall in GDP in successive quarters.
Price-to-Book Ratio (P/B Ratio): A ratio comparing a company's stock price to its book value, indicating if the stock is overvalued or undervalued.
Securities: Financial instruments like stocks, bonds, or options that you can buy and sell to invest money.
Treasury Bonds: Long-term government bonds that are considered safe investments, as they are backed by the government's credit.
Stock Split: A stock split is an action taken by a company to divide its existing shares into multiple ones, increasing the number of shares while reducing the price per share proportionately. The total market value of the shares remains the same, meaning that the split does not directly affect the company's market cap. For example, if a company decides to execute a 2-for-1 stock split, each share owned by an investor is divided into two shares. If an investor originally had 10 shares of a company, and the stock was trading at ₹1,000 per share, after a 2-for-1 split, the investor would have 20 shares, with each share now priced at ₹500.
Brokerage: Brokerage is the fee charged by a broker for buying and selling stocks on behalf of investors on their platform.