The stock market is full of financial words that often sound confusing to beginners. Understanding the terminologies used in the stock market is the first and most important step before you start investing. Whether you want to trade, invest long-term, or simply learn how Indian markets work, knowing these stock market terms will help you make confident decisions and avoid common mistakes.
In this beginner-friendly guide, you’ll learn the meaning of essential stock market terms, examples, advanced concepts, real-life scenarios, and a complete list of terminologies used in the stock market. By the end of this 3000+ word guide, you’ll feel completely comfortable with the language of the market.
What are the terminologies used in the stock market?
Before entering the world of stocks, you must understand its vocabulary. The terminologies used in the stock market are the words, phrases, and definitions that explain how the market works, how investors make decisions, and how prices move. These terms are necessary for reading charts, understanding news, and performing trading or investing activities.
These terminologies include:
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Trading terms
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Investment terms
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Market structure terms
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Risk-related terms
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Price movement terms
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Corporate action terms
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Advanced stock market terms used by professional traders
In short, these are the foundation of your market knowledge. Without them, you can easily get confused or make the wrong decisions.
How the stock market terminology works?
Stock market terminology works like a language system. Once you understand this language, you can:
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Read stock news clearly
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Understand company results
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Analyze charts
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Track market trends
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Follow expert advice
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Make informed trading decisions
For example, when you hear:
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Market is bullish today → It means the market is going up
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High volatility → Prices are moving rapidly in both directions
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Liquidity is low → Difficult to buy/sell quickly
Terminology simplifies everything. It removes the guesswork and helps you think like an investor.
Step-by-step guide to understanding stock market terminologies
Here is a complete plan for mastering every terminology used in the stock exchange and the capital market.
Step 1: Start with beginner-level terms
Learn simple words like stock, index, IPO, demand, supply, volume, etc.
Step 2: Understand how price moves
Terms such as bid price, ask price, open price, close price, and volatility help you know how prices change.
Step 3: Learn trading-specific terms
Delivery, intraday, stop-loss, leverage, margin, brokerage, etc.
Step 4: Move to investment-related terms
Dividend, P/E ratio, EPS, market cap, ROE, long-term investment, equity, portfolio, etc.
Step 5: Learn advanced stock market terms
Derivatives, futures, options, open interest, hedging, arbitrage, etc.
Step 6: Study technical analysis terms
Support, resistance, candle patterns, moving averages, RSI, MACD, etc.
Step 7: Learn fundamental analysis terminology
Balance sheet, income statement, cash flow, debt ratio, valuation metrics.
Step 8: Practice with real-life examples
Use apps like Zerodha, Groww, or Moneycontrol. Read charts and apply the terms.
Essential beginner-friendly stock market terminology for beginners
Stock
A share or ownership unit in a company.
Example: If you buy 10 shares of Infosys, you own a small part of the company.
Share
Another word for stock.
Equity
Represents ownership in a company.
Shareholder
A person who owns shares.
Index
A group of selected stocks representing market performance.
Examples: Sensex, Nifty 50.
Bull Market
A market where prices keep rising.
Example: 2020–2021 was a bull market in India after COVID-19 recovery.
Bear Market
A market where prices keep falling.
Example: March 2020 saw a bear market due to pandemic panic.
Volatility
How quickly prices move up and down.
High volatility = risky
Low volatility = stable
Liquidity
How easily you can buy/sell shares without price impact.
Example: Reliance has high liquidity.
Price-related terms used in the stock exchange and their meaning
Market Price
The current price at which a share is trading.
Open Price
The price at which a stock begins trading for the day.
Close Price
The final trading price of the day.
Bid Price
The price buyers are willing to pay.
Ask Price
The price sellers are asking.
Spread
Difference between bid and ask price.
52-week High/Low
The highest and lowest price of a stock in the last 12 months.
Trading-specific terms used in Indian stock market
Intraday Trading
Buying and selling within the same day.
Delivery Trading
Buying shares and holding them for more than one day.
Stop-Loss
A tool to limit losses.
Example: You set stop-loss at ₹900 for a stock bought at ₹950.
Target Price
Your expected selling price.
Margin
Borrowed money from broker to trade.
Leverage
Trading with more money than you own.
Brokerage
Fee paid to the broker for trade execution.
BTST (Buy Today Sell Tomorrow)
You buy shares today and sell before they enter your demat account.
STBT (Sell Today Buy Tomorrow)
Reverse of BTST, mostly for advanced traders.
Investment-related terms used in capital market
Market Capitalization
Total value of a company.
Formula: Share Price × Total Shares
Categories:
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Large-cap
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Mid-cap
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Small-cap
Dividend
Profit shared by the company.
Example: TCS often gives dividends to shareholders.
Portfolio
Your collection of investments.
Diversification
Spreading investments to reduce risk.
Blue-chip Stocks
Safe, stable, large companies.
P/E Ratio (Price-to-Earnings Ratio)
Shows if a stock is overpriced or underpriced.
EPS (Earnings Per Share)
Shows company profitability.
Corporate action terms used in stock exchanges
Bonus Shares
Free shares given to existing shareholders.
Stock Split
Dividing shares to make price cheaper.
Example: 1:5 split → 1 share becomes 5 shares.
Rights Issue
Company offers shares to existing shareholders at a discount.
Dividend Yield
Dividend per share ÷ Stock price × 100.
Advanced stock market terms
These terms are used by professional traders and analysts.
Derivatives
Financial contracts whose value comes from underlying assets.
Futures Contract
Agreement to buy/sell at a future date at a fixed price.
Options Contract
Right, but not obligation, to buy/sell.
Strike Price
Price at which option can be exercised.
Premium
Cost of buying an options contract.
Hedging
Reducing risk using derivatives.
Open Interest
Total number of open futures or options positions.
Arbitrage
Risk-free profit by buying and selling simultaneously.
Technical analysis terminology used in stock exchange
Candlestick Chart
Shows open, high, low, and close price.
Support Level
Price level where stock tends to stop falling.
Resistance Level
Price level where stock tends to stop rising.
RSI (Relative Strength Index)
Indicates overbought or oversold levels.
MACD
Trend-following momentum indicator.
Moving Average
Shows average stock price over a period.
Real-life examples to understand the terminologies used in the stock market
Example 1:
You buy a stock at ₹200.
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Stop-loss: ₹180
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Target: ₹230
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Market price moves up gradually → Bullish trend.
Example 2:
A company announces a stock split.
Before split: 1 share = ₹2,000
After 1:2 split: 1 share becomes 2 shares, price becomes ₹1,000.
Example 3:
You buy Nifty futures.
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Strike price: 21,500
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Expiry: Monthly contract
Price rises → You make profit.
Benefits of learning stock market terminology
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Reduces risk of loss
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Helps you understand market psychology
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Makes trading decisions smarter
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Builds confidence
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Helps in long-term wealth creation
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Helps you understand financial news
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Improves your analytical skills
Mistakes beginners make while learning stock market terminology
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Learning too many terms at once
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Trading without understanding basics
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Confusing investment terms with trading terms
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Ignoring advanced concepts
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Misunderstanding volatility
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Not applying terms in real-life charts
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Depending only on tips
Best tips to master stock market terminology quickly
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Learn 10 new terms daily
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Use stock market apps for practice
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Watch market charts for at least 10 minutes/day
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Follow reliable finance YouTube channels
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Read company reports
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Join online stock market courses
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Apply terms while trading virtually
Comparison Table: Beginner vs Advanced Stock Market Terms
| Beginner Terms | Meaning | Advanced Terms | Meaning |
|---|---|---|---|
| Stock | Ownership | Derivatives | Contracts based on assets |
| Index | Market indicator | Futures | Contract for future date |
| Bull Market | Rising prices | Options | Right to buy/sell |
| Volume | Shares traded | Open Interest | Active contracts |
| Intraday | Same-day trade | Hedging | Reducing risk |
| Stop-loss | Limit loss | Arbitrage | Risk-free profit |
Conclusion
Understanding the terminologies used in the stock market is essential for every new investor in India. These terms help you analyze price movements, study companies, follow market news, and make smart trading or investing decisions. By learning the meanings, examples, and practical uses of both beginner and advanced terms, you build a strong foundation. Remember, the more clearly you understand these terms, the more confidently you can navigate the stock market. Whether you want to trade or invest, mastering this terminology will always be your biggest advantage.
FAQs: Terminologies used in the stock market
1. What are the most important terminologies used in the stock market for beginners?
Basic terms such as stock, equity, volatility, market cap, index, intraday, SIP, and stop-loss are essential.
2. Where can I find a complete list of terminologies used in the stock market?
You can find a complete list in this guide, including beginner and advanced terms used in trading and investing.
3. What are the terminologies used in the stock market with examples?
Examples include bull market (rising), bear market (falling), stop-loss (risk control), and dividend (profit sharing).
4. What is stock market terminology for beginners?
These include simple terms like share, price, volume, delivery, intraday, and brokerage.
5. What are the advanced stock market terms I should know?
Futures, options, derivatives, arbitrage, hedging, and open interest are advanced-level terms.
6. What are the terms used in Indian stock market daily?
Market price, open, close, volume, volatility, Nifty levels, Sensex movement, and liquidity are used daily.
7. What is the terminology used in stock exchange reports?
It includes terms like bid, ask, market depth, circuit limit, market cap, turnover, and settlement cycle.
8. What are the common terms used in stock exchange and their meaning?
Bid = buyer price, ask = seller price, spread = difference, volatility = price movement, etc.
9. What are the terms used in capital market?
Equity, debt, IPO, FPO, mutual funds, bonds, and ETFs are common capital market terms.
10. How can beginners understand stock market terminology faster?
Start with simple terms, use mobile apps, watch charts, and practice with paper trading.
11. Are these terminologies helpful for trading?
Yes. Understanding trading-related terms helps you execute trades safely and efficiently.
12. Do stock market terminologies remain the same globally?
Most terms are universal, but some may have region-specific usage in Indian markets.
