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Terminologies.pdf
1. Basic Terminologies of Stock Market
Bull & Bear
BULL- Those people who are very optimistic for the market are known as Bull
traders. If company grows, share price will also grow up and market will turn bull
for the traders. Green Color represents Bull Market.
Example- If I am a bull trader and hold optimistic thinking about Reliance Shares
then I will buy its shares.
2. Harshad Mehta was also a bull trader. He used to buy shares on dip and earn
profit by selling at top.
Bear- Just opposite of Bull, Those people who are very pessimistic for the market
known as Bear traders. If company falls, share price will go down. Traders used to
sell on high and buy when stock goes on dip. Red Color represents Bear Market.
Example- Manu Mudra gang was bear. They used to sell shares on top and earn
profit by buying on dip.
3. Bulls and Bears both are important and healthy for stock market.
Bulls attack from bottom to top so it always shows uptrend in market.
Bears attack from top to bottom so it always shows downtrend in market.
Long and Short
4. Long means buy and short means sell. If I have created long positions in Reliance
means I am bull in Reliance stock. When share piece will go up, I will earn profits.
Short is just opposite of Long. If you are bear in market, you will short the shares.
When share price will go down, you will earn profits.
Short Selling
5. When you do not have shares. You can sell shares on high and buy on dip. This
technique is known as Short Selling.
Example- Suppose I have created short positions in Reliance with 2,500 Rs. If price
goes down at 2,400 rs then I will earn profit and if it goes up at 2,600 rs, then I will
make lose.
Square Off
6. Square off means exit. When you exit/close your long or short positions, then it is
known as square off positions.
If you square off long positions means you are selling your shares and if you
square off short positions means you are buying your shares.
When you square off long positions, it is known as Long Unwinding.
When you square off short positions, it is known as Short Covering.
Stock Exchange
7. If you need to buy or sell something you go to market, just like that if you want to
buy or sell your share, you have to use stock market.
Two types of stock market are available in India-
1) National Stock Exchange (NSE)
2) Bombay Stock Exchange (BSE)
8. You cannot buy shares directly from NSE/BSE. For buying or selling shares you
need a broker which can be Zerodha, Fyres, Upstok or anyone else.
You have to PayIn to the broker then broker will buy shares from NSE/BSE.
Market will give shares to broker and they will transfer to you.
9. Broker use to charge their commission as brokerage. It can be differed according
to broker companies.
NSE holds advance technology so most of the traders use NSE for buying/selling
shares.
NIFTY & SENSEX
NSE holds more than 1500 companies while BSE holds more than 5000 companies
in India.
There are two indicators in the market-
1) NIFTY is an indicator of NSE, which shows weightage average of top 50
companies according to their market cap out of 1500 companies of India.
2) SENSEX is an indicator of BSE, which shows weightage average of top 30
companies according to their market cap out of 5000 companies of India.
Now you can understand, whether stock market is up or down accordingly.
10. Market Cap
Total value of company is known as Market Cap of that company.
Market Cap = Total number of shares * Current Market Price
As per previous given story of Raj’s Company –
Total number of shares = 1,00,000
Current Market Price/ Share Price = 100 rs
So Market Cap= 1,00,000*100 = 1 Crore rs.
11. Note- Never decide the size of company with it’s share price. Market Cap use to
decide the size of that company.