What are the terms to know before entering the stock market?


What is share trading?

The process of buying shares of a company and becoming a shareholder of it is known as share trading. Companies in the stock market will be public-held. These companies will not be under private ownership. However, the person with the greatest number of shares will have the right of operation and decision making. These companies will issue shares when they need capital for further financial movements like the expansion of the company, debt payment, etc. Investors who are looking to buy shares with their real money will buy these stocks and become stakeholders in the company. The first time when the company releases its shares after turning the public will generate revenue for the operation of the company. The transactions that follow will be making money for the traders. One trader can sell his stock to another. Likewise, investors can multiply their investments by selling their stocks when their prices are up. There will be several transactions happening in the stock exchange. So, it will be difficult for an individual investor to deal with the exchange directly and do the transactions. So, the individual can seek the help of brokerage firms that will do all the works behind the stage for a small charge. You can download a stock app to see the pricing of the stocks and decide to buy and sell. Before participating in the stock trading with a full heart, you should know some terms of the share market language. In this article, let us discuss some of these terms in brief. 

Terms to know in the stock market language

Margin trading or leverage– It is the process of trading where the buyer can buy more stocks than he can afford with the help of money borrowed from the brokerage firm. You should open a financing account or a margin account to borrow money from the firm.

Moving Average – The price of the stock will vary with time. The average price over a period is known as the moving average of the stock. 

Odd lot – If an individual investor buys stocks in a lot less than a round value of 100 or multiples of 100, it is known as an odd lot purchase. These individual investors are considered as people with less knowledge of investing and will sell these stocks as soon as possible to earn money. 

Rights issue – It is the process of the company appreciating its existing shareholders to buy new stocks at a discounted price to raise quick funds for financial urgencies. The price per stock in the rights issue will be very less than the original stock price, but it is available only for existing shareholders. 

Stock Quote – A stock quote is the decimal representation of the latest stock price along with some supplemental information like the price on the closure of the previous day, and the starting price of the current day. You should use a reliable broker platform to know the accurate quotes without any time delay.