Share market terms you need to know before you start trading

What is share market? To put it simply, it is a rather interesting place. It can help you create a corpus at a much faster rate than most other investment instruments. If you do your research and familiarise yourself with well performing stocks, you can make a profit of thousands or lakhs in a few months and earn huge profits. But, in order for this to happen, you should be aware of everything including the basics of the share market i.e. the terms and jargons related to share trading and how to invest in stock market. Read on.

Today, you can invest in share market online, on your own, by holding them in the electronic format in your demat account. You can purchase shares of a company at a given price and sell it whenever you please, after booking a profit. You should keep track of your investments so that you can sell them at the right time. Similarly, you should know when to purchase stocks and when to sell them, even if it means booking a loss.

Here are some of the most basic terminologies associated with the stock market that every investor should be aware of.

As is apparent, buying in share market means purchasing share units of a particular company. When you buy shares of a certain company, you are taking a position in that company.

Whether you want to get rid of your shares upon achieving your financial goal or if you wish to cut down your losses, you need to sell the stocks. The stocks you sell are purchases by other investors interested in buying them.

When you sell your shares, you need to find buyers who are willing to purchase it at the price you are quoting. This is known as ask.

The prices in the stock market don’t always stay consistent. On some days, they will fall while on other days, they will rise. A Bull Market is a term used in reference to the market condition in which investors expect the prices of stocks to rise, i.e. the entire market seems to be performing optimally and you can book a profit during this time.

Bear market is the time, when the prices of shares fall, almost drastically. That said, when you speak about how to invest in share market, you learn that purchasing shares by investing in the bear market can prove profitable; you can purchase shares at the lowest price and book a profit when the bull trend arrives.

Every company can trade only a certain number of shares on the share market. ‘Authorised shares’ is a term used in reference with the total number of shares which a company may trade on the market.

When a private company decides to “go public”, it has to list itself on the primary market. This is done through an Initial Public Offering (IPO) in which interested investors can purchase shares of a private company, before they are made available on the secondary market.

Once a company is listed on the stock exchange, you can easily purchase and sell its shares. This is done on the secondary market.

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