Bull Market (Bullish) – If you expect the stock prices to go up, you are bullish on the stock price. From a broader perspective, if the stock market index is going up during a particular period, it is referred to as a bull market. (View Highlight)
Bear Market (Bearish) – If you expect the stock prices to go down, you are bearish on the stock price. From a broader perspective, if the stock market index goes down during a particular period, it is referred to as a bear market. (View Highlight)
Trend – The term ‘trend’ usually refers to the general market direction and its associated momentum in the market. For example, if the market is declining fast, the trend is said to be bearish. (View Highlight)
Face value of a stock – The face value (FV) or par value indicates the nominal value of a share. (View Highlight)
52-week high is the highest price point at which a stock has traded during the last 52 weeks (View Highlight)
a 52-week low marks the lowest price point at which the stock has traded during the last 52 weeks. (View Highlight)
The exchange sets up a price band within which the stock can be traded on a given trading day. The highest price the stock can reach on the day is the upper circuit limit, and the lowest price is the lower circuit limit. The limit for a stock is set to 2%, 5%, 10%, or 20% based on the exchange’s selection criteria (View Highlight)
Long position or going long is a reference to the direction of your trade. For example, if you have bought or intend to buy Biocon shares, you are long on Biocon or planning to go long on Biocon, respectively (View Highlight)
Going short or ‘shorting’ is a term used to describe a transaction carried out in a particular order. (View Highlight)
the stock is trading at Rs.425, and you are now bearish. You are convinced that the stock will go back to Rs.405. Is there a way you can profit from your bearish expectation? You could, and it can be done by shorting the stock.
You sell the stock at Rs.425, and 2 days later, assuming the stock trades at Rs.405, you repurchase it.
If you realize the trade’s first leg was to sell at Rs.425, and the second leg was to buy the stock at Rs.405. This is always the case with shorting – you first sell at a price you perceive as high to buy it back at a lower price later.
You have executed the same trade as buying at Rs.405 and selling at Rs.425 but in reverse order. (View Highlight)
• When you short, you have a bearish view of the stock. You profit if the stock price goes down. After you short, if the stock price goes up, you will end up making a loss.
• When you short a stock, ensure you buy the stock back the same day before the market closes unless you use derivatives to short.
• Shorting a stock is easy – you select the stock you wish to short and click on sell. (View Highlight)
Position 1st Leg 2nd Leg Expectation Make money when You will lose money if Long Buy Sell Bullish Stock goes up Stock price drops Short Sell Buy Bearish Stock goes down Stock price goes up (View Highlight)
Square off is a term used to indicate that you intend to close an existing position. If you are long on a stock squaring off the position means selling the stock. (View Highlight)
Squaring off a position means repurchasing the stock when you are short on the stock. Remember, when you repurchase it, you are just closing an existing position, and you are not going long! (View Highlight)
Intraday position – This is a trading position you initiate with an expectation to square off the position within the same day. (View Highlight)
OHLC – OHLC in stock prices refers to open, high, low, and close. We will understand more about this in the technical analysis module. For now, open is the price at which the stock opens for the day, high is the highest price at which the stock trade during the day, low is the lowest price at which the stock trades during the day, and close is the closing price of the stock. (View Highlight)
Volumes represent the total transactions (buy and sell put together) for a particular stock on a particular day (View Highlight)
Market Segment – A market segment is a division within which a certain type of financial instrument is traded. Each financial instrument is characterized by its risk and reward parameters. (View Highlight)
Capital market segments offer tradable securities, such as stocks and exchange-traded funds (ETFs). So if you were to buy or sell shares of a company, you are essentially operating in the capital market segment. (View Highlight)
Futures and Options, generally referred to as the equity derivative segment, are where leveraged products are traded (View Highlight)
The CDS segment is where currency pairs like USD INR, EUR INR, JPY INR are traded. The trading is via futures and options; hence it’s called the currency derivative market. (View Highlight)
The wholesale debt market deals with fixed-income securities. Debt instruments include government securities, treasury bills, bonds issued by a public sector undertaking, corporate bonds, corporate debentures, etc. (View Highlight)
