Trading terminologies
Advisor: One
who offers tips and
recommendations to traders in stock market.
After-hours Deal: Deal that is made after stock market closed. But the transaction
will be scheduled to next day.
Annual
Report:
Publicly listed companies produce an annual audit report to shareholders.
Balance Sheet: The
financial record which shows the debts and assets of a company.
Ban Period: Exchanges
have prescribed a MWPL (Market wide position limit) of every future contract in
the Exchanges.
Bargain: Regarding
sale or purchase in the stock market, bargain is a common word.
Bearer
Stocks:
This is the stock that is unregistered with the owner’s name.
Bearish: A bearish
market indicates that economy is bad, recession is looming and stock prices are
falling.
Bed and Breakfast
Deal:
This Means the sale of share and repurchase on another day. It’s done to set up
profit or loss for the purpose of tax.
Bid Price: This term
indicates the sale price of stocks or shares.
Blue Button: Refers to
the stockbroker’s clerk. Only a blue button is allowed on the trading floor.
Blue Chip: These are
shares of big and reputed companies.
Book Value: The net
worth of the company as listed on the balance sheet.
Brokers: Brokers are
the body which acts as an interface between the Client and the Financial System
and facilitates the proper trading in Financial Products
Brokerage: Service
charge given to broker. Service charge will be with respect to investment not
the profit or loss.
Bull: A person
who considers the share price of the stock exchange to be on the rise.
Bullish: A bullish
market indicates that economy is running good, GDP (Gross Domestic Product) is
growing, people are finding jobs, and stocks are rising.
Call: An extra
installment due on shares.
Capital: The amount
of money used for setting up a new business.
Cash
Settlement: In the stock exchange, there are certain deals like Gilts which
are rendered for cash and not for account settlement. They are settled the next
day of the deal.
Circuit
Limit:
Limit per day by stock exchanges on the movement of stock price.
Contract
Note:
This is a printed confirmation letter from any broker indicating a bargain
which is carried out.
Coupon: Refers to
interest amount payable only for fixed interest stock.
Cum
Dividend:
These are shares that are sold, allowing the buyer to receive the following
dividend.
Dawn Raid: Refers to
the buying of a huge amount of shares in the morning at the opening of stock
market.
Dealing: This means
the purchase and sale of shares.
Debenture: The stock
that a company issues which are backed by assets.
Demat
Account: acts
as a warehouse to store shares bought through the Trading account of the
Client; demat account is an electronic account similar to the bank account the
only difference being a demat account is used to store Dematerialized shares of
a company.
Depreciation: The amount
of money set aside for replacement of the assets.
Derivatives:
as the name
suggests is an instrument which is derived from some Underlying Asset and its
movement depends on the movement of the underlying Asset.
Dividend: The part of
the company’s profits which is usually distributed to company’s shareholders,
normally on regular basis.
Equities: These are
the ordinary shares. They are different from debenture and also from loan
stock.
Ex-dividend: The share
which is bought without any right for receiving the next dividend. This is
usually retained by sellers.
Exchanges: provide a
facility for Traders to exchange (Buy/ Sell) Securities, Commodity, Currency
via an electronically driven platform.
Exposure: Every Trader
is given leverage on the amount of cash and non-cash margin deposited with the
member broker
Final
Dividend:
This is the dividend which is declared according to the company’s annual
results.
Financial
Instruments: A financial
instrument is a tradable asset of any kind; either cash, evidence of an
ownership interest in an entity, or a contractual right to receive or deliver
cash or another financial instrument
Futures: Contracts
that allow any holder the legal right to buy or sell Indexes and Commodities in
the future at a price set today.
Gross: The
interest paid without deducting of tax.
Hedge: This means
to insure the risk.
Investors
and Traders: These are the makers of the market, the real end client for whom
the whole system exists.
Initial
Public Offering: The issue of new shares by a previously private company as it
becomes a public company.
Limit Order: This is an
order to any stockbroker specifying any fixed price limit.
Liquidation: Converting
the prevailing assets to cash.
Loan Stock: The stock
that bears fixed interest rate. It’s different from debenture stock because
it’s not required to be secured by any asset.
Lot size: It
represents standardized quantity of financial instruments one should trade.
Margin: Every Trader
is given leverage on the amount of cash and non-cash margin deposited with the
member broker
Nominee: The term
refers to a person acting on the behalf of another in the stock market in
documentary as well as financial affairs.
Offer Price: Refers to
the specific price at which one can buy stocks and shares.
Open
Interest:
The total number of outstanding contracts which are yet to be squared-off as on
date.
Options: The term
means the right to purchase (call option) and sell (put option) a particular
share at a particular price within a particular period.
Ordinary
Share:
This is a share where the dividends usually vary in the amount.
Over the
Counter Market (OTC): Refers to a marketplace outside the main stock market.
PLC: This means
Public Limited Company (formerly Ltd). In the stock market, some public limited
companies are not always quoted.
Portfolio: A selection
of shares usually held by a person or fund.
Proxy: Anybody who
votes on another person’s behalf if the person is unable to attend a shareholders’
meeting.
Pre-open
Session: This
session is basically to decide the opening price of the markets in Normal
trading session
Resistance: The price
point where a stock witnesses selling (supply) and normally stops to rise is
known as Resistance.
Regulator: It is a
body which regulates and overlook to the smooth Functioning of Financial Market
Systems, they do recognize, allow, dis-allow other financial intermediaries for
working in financial markets
Roll Over: A process of
squaring off the current open position and taking the same directional position
in the next series of the Future contract.
Short Sell: This is a
very unique concept, where a trader sells a share first (without having that
share in his demat account) and then buys it back.
Stock: Also
referred to share or equity, stock is the basic ownership unit of a company.
Stock
Warrants:
An instrument that conveys the right to buy additional stock within a fixed
time period at a set price. Warrants differ from stock options in the way they
are exercised.
Stoploss: Stop
loss, as the name suggest is to stop or restrict the losses in a trade to a
particular price point.
Stock Index:
It is a measurement of the value of a
section of the stock market. It is computed from the weighted average
prices of selected stocks.
Sub-broker: A sub broker
is like a ' Franchisee' of a stock broker registered with SEBI and can act like
and on behalf of a Broker.
Support: The price
point where a stock witnesses buying (demand) and normally stops to fall is
known as Support.
Target: Target, as
the name suggest is used to book the profits in a trade at a particular price
point.
The
Chickens: Chickens
are afraid to lose everything. Their fear tops their need to make profits and
so they invest only in money market securities or get out of the markets
entirely
The Pigs:
Pigs are
high-risk investors looking for that one big shot in a short span of time. Pigs
buy on hot tips and invest in companies without doing their due diligence.
Tick size: Minimum
value by which a stock price can move up or down. 0.05 is standard minimum
value
Trading
Account:
It is used for the purpose of
trading which stores information regarding the buy, sell price, average price,
Limits, Profit and loss statement of the client.
Trigger
Price: A
trigger price is the price which specifies the price point where the order will
enter the system and not before that.
Yearlings: Bonds
issued for twelve-month term, mainly by local authorities.
Yield: The gross dividend presented as the percentage
of the share price.
