Here are 8 commonly used stock market jargons which you should know before trading or investing in the stock markets.
Long Position – ‘Long position’ or ‘going long’ is simply a reference to the direction of your trade. For example if you have bought or intend to buy Biocon shares then you are said to be long on Biocon or planning to go long on Biocon respectively. If you have bought the Nifty futures with an expectation that the index will trade higher then essentially you have a long position on Nifty.
Short Position – In markets you are allowed to sell first and buy later. This is called shorting. For example you can sell a stock at say Rs 100 buy it back at R.95. By doing so you are essentially making a profit of Rs 5. If you think about it, this is as good as buying at Rs 95 and selling at Rs 100. It is just that when you short, the order of transaction is reversed where you sell first, buy later.
Square off – Square off is a term used to when you close an existing market position.
OHLC – OHLC at the end of the day stands for Open, High, Low, and Close of the stock price. Open is the price at which the stock opens for the day, high is the highest price at which the stock traded during the day, low is the lowest price at which the stock trades during the day, and the close is the closing price of the stock. For example, the OHLC of TCS on June 2, 2016 was Rs 2600, Rs 2650, Rs 2598 and Rs 2651
Volume – Volumes represent the number of shares traded on the stock exchange. For example if I buy 100 shares from you and 50 shares from someone else, then volumes recorded will be 150.
Bull Market (Bullish) – If you expect the stock prices to go up then you are said to be bullish on the stock price. From a broader perspective, if the stock market index is going up during a particular time period, then it is referred to as the ‘bull market’.
Bear Market (Bearish) – If you expect the stock prices to go down then you are said to be bearish on the stock price. From a broader perspective, if the stock market index is going down during a particular time period, then it is referred to as the ‘bear market’.
Face value of a stock – Face value (FV) or par value of a stock indicates the fixed denomination of a share. The face value is important with regard to corporate action. Usually when dividends or stock split are announced they are issued keeping the face value in perspective. For example the FV of Infosys is 5, and if they announce an annual dividend of Rs 63 then it means the dividend paid is 1260 per cent (63 divided by 5).
The author is VP-Education Services, Zerodha