Here's a list of major words related to share trading with a little description:
Basic Terminology
- Share (Stock): A unit of ownership in a company. When you buy a share, you become a part-owner of the company.
- Stock Market: A marketplace where shares of publicly traded companies are bought and sold.
- Broker: A licensed professional who acts as an intermediary between buyers and sellers in the stock market.
- Exchange: A physical or electronic marketplace where securities, commodities, derivatives, and other financial instruments are traded. Examples include the New York Stock Exchange (NYSE) and the National Stock Exchange of India (NSE).
- Order: An instruction to a broker to buy or sell a security at a specific price or within a specific price range.
- Bid: The highest price a buyer is willing to pay for a share.
- Ask: The lowest price a seller is willing to accept for a share.
- Spread: The difference between the bid and ask price of a share.
- Trade: The buying or selling of a share.
Buying and Selling
- Buy Order: An instruction to a broker to purchase a share.
- Sell Order: An instruction to a broker to sell a share.
- Long Position: When an investor buys a share with the expectation that the price will go up.
- Short Position: When an investor borrows a share and sells it with the expectation that the price will go down and they can buy it back later at a lower price to return to the lender. This is a risky strategy.
- Margin: A loan from a broker that allows you to buy more shares than you have cash for. Margin trading can magnify both profits and losses.
Order Types
- Market Order: An order to buy or sell a share at the best available price in the market.
- Limit Order: An order to buy or sell a share at a specific price or better.
- Stop Order: An order to buy or sell a share when the price reaches a specific stop price.
Investment Strategies
- Bull Market: A market where share prices are generally rising.
- Bear Market: A market where share prices are generally falling.
- Dividend: A distribution of a portion of a company's profits to its shareholders.
- Portfolio: A collection of investments held by an investor.
- Diversification: The act of spreading your investments across different asset classes to reduce risk.
Analysis
- Technical Analysis: A method of analyzing share prices and trading volume to identify patterns and predict future price movements.
- Fundamental Analysis: A method of analyzing a company's financial statements and other factors to assess its long-term investment potential.
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