0Young individuals who have the interest and the enthusiasm for stock trading usually lack the basic domain knowledge of the market. Although trading doesn't require a lot of time and money, it is still essential to equip oneself with some basic tools and necessary training to take the right decisions. Before you go out into too many technicalities, here is a little glossary with few key terminologies that you should know before you start investing in the trade market.
1. Agent: A brokerage firm is said to be an agent when it acts on behalf of the client in buying or purchasing of shares. At no point in time in the entire transaction, the agent will own the shares.
2. Ask/Offer: The lowest price an owner is willing to sell the stocks.
3. Assets: Everything the company owns on its name, including the cash, equipment, land, technology etc. which shows the total wealth of the company.
4. At the money: A situation at which options strike price is identical to the price of the underlying securities. Options trading activity tends to be high when options are at the money.
5. Bear Market: A market in which stock prices are falling consistently.
6. Beta: It is a measurement of the relationship between the stock price of any particular stock and the movement of the whole market.
7. Bid: It is the highest price a buyer is willing to pay for a stock. It is opposite of ask/offer.
8. Blue Chip Stock: Stocks of large, well-established and financially sound companies which hold a record of consistently increasing rate of paying the dividends over decades to its stockholders. Blue chip stocks typically have a market capitalization in thousands of crores.
9. Board Lot: A standard trading unit as defined by the particular exchange board. Board lot size usually depends on the per share price. Common board lot size are 50, 100, 500, 1000 units.
10. Bonds: It is promissory note issued by companies or government to its buyers. It speaks about the specified amount held for a specified time period by the buyer.
