- Stock: When you own a stock, you own a small part of a company. Companies sell stocks to raise money, and people buy them to invest in the company’s success.
- Share: A share is one piece of ownership in a company. If a company has 100 shares and you own 10 of them, you own 10% of the company.
- Dividend: A dividend is a payment made by a company to its shareholders. It’s like a reward for owning the company’s stock.
- Market Capitalization: Market capitalization, or market cap, is the total value of a company’s outstanding shares of stock. It’s calculated by multiplying the current stock price by the number of outstanding shares.
- Bull Market: A bull market is when the prices of stocks are rising. It’s a good time for investors because they can make a lot of money.
- Bear Market: A bear market is when the prices of stocks are falling. It’s a tough time for investors because they can lose money.
- Volatility: Volatility refers to how much the price of a stock or the overall market changes over time. High volatility means prices are fluctuating a lot, while low volatility means prices are more stable.
- Index: An index is a collection of stocks that represent a particular market or industry. The most well-known index is the Sensex, which tracks the performance of 30 large companies in the India.
- ETF (Exchange-Traded Fund): A type of investment fund that trades on stock exchanges and holds assets such as stocks, bonds, or commodities.
- Blue Chip Stocks: Blue chip stocks are shares of large, well-established companies with a history of stable earnings and dividends. They are considered safer investments compared to smaller, riskier companies.
- P/E Ratio (Price-to-Earnings Ratio): The price-to-earnings ratio (P/E ratio) is a valuation metric that compares a company’s current stock price to its earnings per share. It’s used to determine whether a stock is overvalued or undervalued.
- Market Order: A market order is an instruction to buy or sell a stock at the current market price. It’s executed immediately, regardless of the price.
- Limit Order: A limit order is an instruction to buy or sell a stock at a specified price or better. It’s only executed if the market price reaches the specified level.
- Bid: The highest price a buyer is willing to pay for a stock at a given time.
- Ask (or Offer): The lowest price a seller is willing to accept for a stock at a given time.
- Volume: The number of shares traded in a stock or the overall market during a specific period of time.
- Short Selling: A trading strategy in which an investor sells borrowed shares of a stock with the expectation that the price will decline, allowing them to buy back the shares at a lower price and profit from the difference.
- Margin: Borrowed funds used to purchase stocks or other securities, with the securities serving as collateral for the loan.
- Diversification: Diversification is a risk management strategy that involves investing in a variety of assets to reduce the impact of any single investment’s performance on the overall portfolio.
- Liquidity: The ease with which an asset can be bought or sold in the market without significantly impacting its price.
- Day Trading: A trading strategy in which positions in stocks or other financial instruments are opened and closed within the same trading day, with the aim of profiting from short-term price movements.
- Investor: An investor is someone who buys stocks or other assets with the hope that they will increase in value over time.
- Broker: A broker is a person or company that helps you buy and sell stocks. They usually charge a fee for their services.
- Earnings Per Share (EPS): Earnings per share is a measure of a company’s profitability. It’s calculated by dividing the company’s net income by the number of outstanding shares.
- Stock Split: A stock split is when a company divides its existing shares into multiple shares. For example, in a 2-for-1 stock split, each existing share becomes two shares.
- IPO (Initial Public Offering): An IPO is the first time a company sells its stock to the public. It allows the company to raise capital and become publicly traded.
- Asset Allocation: Asset allocation is the process of deciding how to distribute your investments among different asset classes, such as stocks, bonds, and cash. It’s based on factors like risk tolerance, investment goals, and time horizon.
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