Comprehensive Stock Market Glossary
Master the language of the market with detailed explanations, practical examples, and trading insights.
- Ask Price
- The lowest price a seller is willing to accept for a security. For example, if Apple shares have an ask price of ₹150, sellers want at least that amount per share.
- Bid Price
- The highest price a buyer is willing to pay for a security. Using Apple shares, if the bid price is ₹149.50, buyers are willing to pay that price or less.
- Bear Market
- A market environment where prices are falling or expected to fall by 20% or more over time, usually reflecting pessimistic investor sentiment. Example: The 2008 financial crisis triggered a bear market.
- Bull Market
- A market phase marked by rising prices and widespread investor confidence, typically lasting months or years.
- Blue-Chip Stocks
- Shares of large, financially sound, and well-established companies with a history of reliable growth and dividends, e.g., Reliance Industries, TCS.
- Book Value
- The net asset value of a company calculated as total assets minus intangible assets and liabilities, representing its accounting value.
- Capital Gain
- The profit made from selling an asset like stocks at a price higher than the purchase price.
- Derivative
- A financial instrument whose value is derived from an underlying asset such as stocks, bonds, commodities, or indices. Examples include futures, options, and swaps.
- Dividends
- Distributions of a portion of a company's earnings to shareholders, paid as cash or in additional shares.
- Drawdown
- The peak-to-trough decline in portfolio value, commonly expressed as a percentage. Important to measure risk and maximum loss.
- Exchange-Traded Fund (ETF)
- A type of fund traded on stock exchanges, holding assets like stocks or bonds, often tracking an index.
- Fundamental Analysis
- Evaluation of a company’s financial health and intrinsic value through financial statements, economic indicators, and industry factors.
- Initial Public Offering (IPO)
- The first sale of a company’s shares to the public to raise capital, allowing the company to be publicly traded.
- Liquidity
- How quickly and easily an asset can be bought or sold in the market without impacting its price.
- Margin
- Borrowed money from a broker to trade financial assets, increasing both potential profits and losses.
- Market Capitalization
- The total market value of a company’s outstanding shares calculated as share price multiplied by number of shares.
- Option
- A contract giving the buyer the right but not the obligation to buy or sell an asset at a specified price before expiry.
- Price-Earnings (P/E) Ratio
- Valuation ratio showing the relationship between a company’s share price and earnings per share.
- Resistance Level
- A price level where selling pressure tends to halt upward price movement.
- Support Level
- A price level where buying pressure tends to prevent the price from falling below.
- Technical Analysis
- Analysis of past market data like price and volume to forecast future price movements, using charts and indicators.
- Volatility
- The degree of variation in trading prices over a period, signifying risk. Higher volatility means larger price swings.
- Volume
- The number of shares or contracts traded in a security or market during a given period.
Understanding these terms will empower you to analyze markets, communicate effectively, and make confident trading decisions.