Blog #06 - Basic Terminology Of Share Markets - Part I - Finance With Atul

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Sunday, April 11, 2021

Blog #06 - Basic Terminology Of Share Markets - Part I

 

Basic Terminology Of Share Markets - Part 1

 

In Blog #05 we learnt how to analyze the stock here we will see the basic terminology of share market that are frequently used in day to day market


 

Bulls : The term “Bulls” in share market refers to those people who want or expects that the market will go up i.e. share price of a particular stock will rise and we can say that the stock is bullish. Similarly if the indices closes higher than the last day we can say market was bullish on that particular day. 

 

Bears : The term “Bears” in share market refers to those people who want or expects that the market will go down i.e. share price of a particular stock will fall or sink or go low and we can say that the stock is Bearish. Similarly if the indices closes lower than the last day we can say market was bearish on that particular day.

 

Bulls vs. Bears

Square-Off: The term is used for investors and traders but frequently used for trader i.e. in intraday trading. In square off in share market a trader buys or sells a particular quantity of an asset (mostly stocks) and later in the day reverses the transaction, in the hope of earning a profit i.e. you exit the position that you made in trade after achieving your target. Here target may result in your profit or loss. 

 

Rally: A rally is a period of sustained increases in the prices of stocks, bonds or indices. This rally may happen in Bullish Market or Bearish Market. 

 

Crash: A crash in market refers to sudden drop of share prices of stocks. This may be temporarily or long lasting as we saw in financial crisis of 2008. It will be temporary if there is some negative news or profit booking in share market but it may be long lasting if there are some economic troubles around the globe or the country.

 

Correction: Generally share market goes slowly i.e. share price of company will not increase or decrease suddenly always there is a deciding factor which decides the current market price of a share. But some time it may happens that share price of company suddenly goes up or down based on news – positive or negative. For example in March 2020 during Covid Pandemic, market crashed about 35% within 1 month after that it also recovers too fast to its initial stage. Now correction is the term given to “situation” in which share market or share price of a company stabilizes itself irrespective of news. Here one can, if he/she has good knowledge of movement of share market, can take decision to invest or exit the share market if he/she knows when the correction will take place.

 

Consolidation: Consolidation in technical analysis refers to an asset oscillating between well-defined patterns of trading levels. Consolidation is generally interpreted as market indecisiveness, which ends when the asset's price moves above or below the trading pattern.

 

Bonus Share: Bonus Shares are the additional shares that are given to existing shareholders without any additional cost. Company generally doesn’t give bonus share but sometime it offers bonus share to its investors to increase their holdings in the company.

Rally in Share Market

 

Dividend: Dividend is the amount of profit paid to company’s shareholder that the company makes during a particular quarter. 

 

Delivery Position: Basically there are two type of investing money one is intraday and other one is delivery basis. In intraday trading trader buy/sell its share and books the profit/loss on same day i.e. it reverses it transaction on the same day means in intraday trading you have to buy/sell the asset on the same day irrespective you made profit or loss while in delivery position, investor/trader can buy/sell a particular stock today but may reverses his/her transaction after some time or very long time. Investors take delivery position and traders take intraday.

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