Stock Market Glossary for Beginners

Table of Contents:

Introduction: Why Stock Market Words Feel So Confusing

If you’ve ever watched business news or opened a stock market app and felt lost within minutes, you’re not alone.

Words like share, index, market cap, bull market, or portfolio are thrown around as if everyone already understands them. Most beginners don’t. And that’s okay.

The stock market isn’t hard because it’s complicated.
It feels hard because nobody explains the language properly.

Think about it:

You wouldn’t expect someone to understand medical reports without learning basic terms.
You wouldn’t drive a car without knowing what brake and accelerator mean.

The stock market works the same way.

What This Glossary Is (And What It Is Not)

This glossary is:

A plain-English dictionary of stock market words
Written for absolute beginners
Meant to be read slowly and revisited often
Focused on understanding, not impressing

This glossary is not:

A trading course
A get-rich-quick guide
A place for complex formulas or expert-only language

You don’t need any background knowledge to read this.

How to Use This Glossary

You don’t have to read everything in one go.

Use this page like:

A reference book
A bookmark you come back to
A helper when you see a confusing word in news or apps

Whenever you see a word you don’t understand:

Come here
Read the meaning
Look at the example
Move on confidently

That’s it.

What You’ll Find Inside This Glossary

In the sections ahead, you’ll find:

Short, clear definitions
Real-life examples using ₹
Simple formulas only where useful
Common mistakes explained calmly
No unnecessary jargon

Everything is explained as if a friend is teaching you, not a textbook.

When you’re ready, we’ll continue with the next sections and expand this into one of the most beginner-friendly stock market glossaries in India.

Section 1: Stock Market Basics (Start Here)

These are the foundation words. If these make sense, everything else becomes easier.

1. Stock / Share

A stock (or share) means owning a small part of a company. If a company has 1,000 shares and you buy 1 share, you own 1/1000th of that company.

👉 When the company grows, your share value can grow.

2. Company (Listed Company)

A listed company is a company whose shares can be bought and sold on the stock market.

3. Stock Market

The stock market is a place where people buy and sell shares of companies.

4. NSE & BSE

They are the two main stock exchanges in India.

NSE – National Stock Exchange
BSE – Bombay Stock Exchange

Simple way to remember: They are like two big shopping malls where company shares are available.

5. Share Price

The current price at which one share is being bought or sold.

Example:
If Infosys share price is ₹1,500, you need ₹1,500 to buy one share.

6. Investor

An investor buys shares to hold them for a long time (years).

Company growth
Wealth creation
Dividends (extra income)

👉 Investors are usually patient.

7. Trader

A trader buys and sells shares for short-term profit (days, weeks, or even minutes).

Key difference from investor:

Investor	Trader
Long-term	Short-term
Less stress	More stress
Slower decisions	Faster decisions

8. Demat Account

A Demat account stores your shares in digital form.

Think of it like: A bank locker, but for shares instead of cash or gold.

👉 Without a Demat account, you cannot own shares today.

9. Trading Account

A trading account is used to buy and sell shares.

Simple flow:
Trading account = action
Demat account = storage

10. Broker

A broker is a platform or company that connects you to the stock market.

Examples: Zerodha, Groww, Angel One

👉 You cannot directly buy from NSE/BSE. You need a broker.

11. Portfolio

A portfolio is the collection of all shares you own.

Example:
If you own:

Tata Motors
HDFC Bank
Infosys

All together, this is your portfolio.

12. Holding

Shares that you currently own are called holdings.

👉 If you haven’t sold them yet, they remain holdings.

13. Quantity

The number of shares you want to buy or sell.

14. Order

An instruction you give to buy or sell shares. Every buy or sell action starts with an order.

Simple example: “I want to buy 5 shares of XYZ company.” That instruction is called an order.

15. Market Price

The price at which buyers and sellers are currently agreeing. This price keeps changing every second during market hours.

16. Market Order

An order to buy or sell immediately at current market price.

Good for:
Beginners who want simplicity.

Risk:
Price may change slightly during execution.

17. Limit Order

An order where you set your own price.

Example:
Current price = ₹500
You place a limit order to buy at ₹480

👉 Order executes only if price comes to ₹480.

18. Funds / Balance

Money available in your trading account to buy shares.

19. Brokerage

A small fee charged by the broker for each trade.

20. Charges

Extra costs like:

Brokerage
Taxes
Exchange fees

Stock Market Word	Meaning / Definition	Notes or Example (Only Where Needed)
Share	A small ownership in a company	Owning 1 share means you own a tiny part of the company
Stock	Another word for share	Stock and share mean the same thing
Company	A business that sells shares to the public	Only listed companies appear in the stock market
Stock Market	A place where shares are bought and sold	Everything happens online
NSE	One of India’s main stock exchanges	Short for National Stock Exchange
BSE	One of India’s main stock exchanges	Short for Bombay Stock Exchange
Share Price	Price of one share of a company	Changes throughout the trading day
Investor	Person who buys shares for long term	Focuses on growth over years
Trader	Person who buys and sells quickly	Short-term focus, higher risk
Demat Account	Account that stores shares digitally	Like a bank locker for shares
Trading Account	Account used to buy and sell shares	Connects you to the stock market
Broker	Platform that helps you trade shares	Example: Zerodha, Groww
Portfolio	All shares owned by a person	Shows total investments
Holding	Shares you currently own	Not yet sold
Quantity	Number of shares bought or sold	Quantity 10 = 10 shares
Order	Request to buy or sell shares	Every trade starts with an order
Market Price	Current trading price of a share	Changes every second
Funds / Balance	Money available to invest	Must be sufficient to place orders
Brokerage	Fee charged by broker	Deducted from profit
Charges	Extra costs apart from share price	Includes taxes and exchange fees

Section 2: Profit, Loss & Returns (Money Words Made Simple)

These words answer just one question:

“Am I making money or losing money?”

Nothing more.

1. Investment

The amount of money you put into buying shares.

2. Cost Price

The price at which you bought a share.

3. Current Price (Market Price)

The price at which the share is trading right now. This keeps changing during market hours.

4. Profit

You make a profit when you sell a share for more than you paid.

Formula:
Profit = Selling Price − Cost Price

Example:
Buy price = ₹500
Sell price = ₹650

Profit = ₹650 − ₹500 = ₹150

5. Loss

You make a loss when you sell a share for less than you paid.

Formula:
Loss = Cost Price − Selling Price

Example:
Buy price = ₹500
Sell price = ₹420

Loss = ₹500 − ₹420 = ₹80

6. Return

Return shows how much your money has grown or fallen. It is usually shown in percentage, not rupees.

7. Percentage Return

Profit or loss shown as a percentage of your investment.

Formula:
Percentage Return = (Profit or Loss ÷ Investment) × 100

Example:
Investment = ₹1,000
Profit = ₹200

Return = (200 ÷ 1,000) × 100 = 20%

8. Unrealised Profit

Profit you see on screen, but haven’t booked yet.

👉 You haven’t sold the share.

Example:
Buy price = ₹100
Current price = ₹140

Unrealised profit = ₹40
(Only on paper)

9. Unrealised Loss

Loss you see on screen, but haven’t booked yet.

👉 Share is still in your account.

Important reminder:
Unrealised loss is not final.

10. Realised Profit

Profit that becomes real after you sell the share.

👉 Once sold, profit is locked.

11. Realised Loss

Loss that becomes final after selling.

👉 This cannot change after selling.

12. Break-Even Price

The price at which you neither make profit nor loss.

Simple explanation:
Selling price = Buy price + charges

👉 Below this = loss
👉 Above this = profit

13. Holding Period

How long you hold a share before selling.

Examples:

3 days → very short-term
6 months → medium-term
5 years → long-term

14. Compounding (Very Important)

Earning returns on your previous returns.

Simple example:
You invest ₹10,000.
Year 1 → becomes ₹11,000
Year 2 → returns calculated on ₹11,000

👉 Money grows faster over time.

15. Capital Gain

Profit made from selling a share.

Simple language:
Capital gain = realised profit

👉 Tax may apply (details later, no stress now)

16. Capital Loss

Loss made from selling a share. Can sometimes reduce tax burden.

Stock Market Word	Meaning / Definition	Notes or Example (Only Where Needed)
Investment	Money used to buy shares	Amount you put in
Cost Price	Price at which a share was bought	Used to calculate profit or loss
Market Price	Current price of a share	Changes during market hours
Profit	When selling price is higher than buying price	Positive outcome
Loss	When selling price is lower than buying price	Negative outcome
Return	Growth or fall of investment	Usually shown in percentage
Percentage Return	Profit or loss as a percentage	Helps compare investments
Unrealised Profit	Profit shown but not booked	Share not sold yet
Unrealised Loss	Loss shown but not booked	Can change over time
Realised Profit	Profit after selling the share	Final and locked
Realised Loss	Loss after selling the share	Final outcome
Break-even Price	Price with no profit or loss	Includes charges
Holding Period	Time a share is held	Days, months, or years
Compounding	Earning returns on returns	Works best over long time
Capital Gain	Profit from selling shares	Tax may apply
Capital Loss	Loss from selling shares	Can offset gains

Section 3: Buying & Selling Shares (How Trades Actually Happen)

This section explains what happens when you click Buy or Sell in a stock market app.

No technical talk. Just the basics.

Order Execution

Execution means your order is successfully completed. If no one is ready to sell (or buy) at your price, the order will wait.

Trade Value

Trade value is the total amount of the transaction.

Formula:
Trade Value = Share Price × Quantity

This does not include charges.

Bid Price

Bid price is the highest price a buyer is willing to pay.

This is shown on the buy side.

Ask Price

Ask price is the lowest price a seller is willing to accept.

This is shown on the sell side.

Bid–Ask Spread

The difference between bid price and ask price.

A smaller spread usually means the stock is actively traded and easier to buy or sell.

Liquidity

Liquidity means how easily a share can be bought or sold.

High liquidity:

Many buyers and sellers
Faster execution

Low liquidity:

Fewer buyers and sellers
Orders may take time

Trading Hours

The time during which the stock market is open.

In India:

Market opens in the morning
Closes in the afternoon
Closed on weekends and holidays

Orders outside trading hours are executed when the market opens.

Intraday Trading

Buying and selling a share on the same day.

No delivery of shares happens to your Demat account.

This is higher risk and not beginner-friendly.

Delivery

Buying shares and holding them beyond the same day.

Shares get credited to your Demat account.

This is how long-term investors usually buy.

Square Off

Closing an existing position.

If you bought a share, square off means selling it.
If you sold a share, square off means buying it back.

Trade Confirmation

A message or notification that confirms your order is completed.

Always check this to ensure the trade actually happened.

Failed Order

An order that did not execute due to:

Price not reached
Insufficient funds
Technical issues

No money or shares are exchanged in this case.

Stock Market Word	Meaning / Definition	Notes or Example (Only Where Needed)
Order	Request to buy or sell shares	Every trade starts with an order
Order Execution	Completion of a buy or sell order	Happens only if price matches
Market Order	Buy or sell at current market price	Simple, fast, less price control
Limit Order	Buy or sell at a chosen price	Executes only if price is reached
Pending Order	Order waiting for execution	Cancelled if price not met
Quantity	Number of shares traded	Quantity 5 = 5 shares
Trade Value	Total value of the trade	Price × quantity
Bid Price	Highest price a buyer is willing to pay	Shown on buy side
Ask Price	Lowest price a seller wants	Shown on sell side
Bid–Ask Spread	Difference between bid and ask price	Smaller spread = easier trading
Liquidity	Ease of buying or selling shares	High liquidity = faster trades
Trading Hours	Time when market is open	Orders execute only then
Intraday	Buy and sell on same day	Higher risk, not beginner-friendly
Delivery	Shares held beyond same day	Used for long-term investing
Square Off	Closing an existing trade	Buy → sell or sell → buy
Trade Confirmation	Message confirming trade completion	Always check after placing order
Failed Order	Order that did not execute	No money or shares exchanged

Section 4: Market Movements & News Terms

These terms describe what the market is doing, not what you must do.

Market

When people say “the market,” they usually mean the overall stock market, not one company.

It reflects how many stocks are moving up or down together.

Index

An index is a group of important stocks used to show how the market is performing.

Think of it like a report card for the market.

Nifty 50

Nifty 50 represents 50 large and well-known companies listed on the NSE.

If Nifty goes up, it generally means large companies are doing well.

Sensex

Sensex represents 30 major companies listed on the BSE.

It is one of the oldest market indicators in India.

Index Movement

When an index rises or falls, it shows the average direction of its stocks.

Not all stocks move the same way as the index.

Market Up

Market up means more stocks are rising than falling.

This does not mean every stock is profitable.

Market Down

Market down means more stocks are falling than rising.

This is a normal part of the market cycle.

Bull Market

A bull market is a period when markets rise steadily over time.

It usually happens when:

Companies are growing
Economy is stable

Bull markets can last months or years.

Bear Market

A bear market is a period when markets fall for a long time.

It is often caused by:

Economic slowdown
Fear or uncertainty

Bear markets test patience.

Volatility

Volatility means how fast and how much prices move up and down.

High volatility = sharp movements
Low volatility = stable movements

Volatility itself is not good or bad.

Correction

A correction is a temporary fall after the market has gone up a lot.

Usually around 10% or more from recent highs.

Corrections help markets cool down.

Crash

A crash is a sudden and deep fall in the market.

Crashes are rare but emotionally difficult.

Markets have always recovered over time.

Rally

A rally is a fast rise in prices over a short period.

Rallies often happen after bad news or during strong optimism.

Trend

Trend shows the general direction of the market.

Uptrend → prices rising
Downtrend → prices falling
Sideways → prices moving in a range

Support

Support is a price level where a stock tends to stop falling.

It is based on buying interest.

Resistance

Resistance is a price level where a stock finds it hard to move higher.

It is based on selling pressure.

Breakout

A breakout happens when price moves above resistance or below support.

Breakouts can lead to strong price movement.

Gap Up

A gap up means the stock opens much higher than the previous day’s closing price.

Usually due to overnight news.

Gap Down

A gap down means the stock opens much lower than the previous day’s closing price.

Often caused by negative news.

Volume

Volume is the number of shares traded in a day.

High volume means high interest.

Low volume means less activity.

Market Sentiment

Sentiment shows the overall mood of investors.

Positive sentiment → optimism
Negative sentiment → fear

Sentiment changes faster than fundamentals.

Overbought

Overbought means prices have risen too quickly.

It may pause or fall temporarily.

Oversold

Oversold means prices have fallen sharply. It may bounce back in the short term.

Stock Market Word	Meaning / Definition	Notes or Example (Only Where Needed)
Market	Overall stock market direction	Not one single stock
Index	Group of stocks showing market performance	Acts like a market report card
Nifty 50	Index of 50 major companies on NSE	Reflects large companies
Sensex	Index of 30 major companies on BSE	One of India’s oldest indices
Market Up	More stocks rising than falling	Index usually rises
Market Down	More stocks falling than rising	Normal market phase
Bull Market	Long period of rising prices	Driven by growth and confidence
Bear Market	Long period of falling prices	Driven by fear or slowdown
Volatility	Speed and size of price movement	High = sharp ups and downs
Correction	Temporary fall after a rise	Helps cool overheated markets
Crash	Sudden and deep market fall	Rare but emotionally tough
Rally	Fast rise in prices	Often after bad news
Trend	General price direction	Up, down, or sideways
Support	Price level where fall slows	Buying interest appears
Resistance	Price level where rise slows	Selling pressure appears
Breakout	Price moves past support or resistance	Can lead to strong moves
Gap Up	Price opens much higher than previous close	Usually due to news
Gap Down	Price opens much lower than previous close	Usually due to bad news
Volume	Number of shares traded	High volume = high interest
Market Sentiment	Overall mood of investors	Optimism or fear
News Impact	Effect of news on prices	Short-term reactions common
Overbought	Price rose too fast	May pause or fall
Oversold	Price fell too fast	May bounce temporarily

Section 5: Risk, Safety & Protection Terms

These words explain what can go wrong, how serious it is, and how people try to manage it.

Understanding these terms doesn’t make you fearful.
It makes you prepared.

Risk

Risk means the chance of losing money.

Every investment has risk.
No risk usually means no growth.

The goal is not to avoid risk, but to manage it.

Safety

Safety in the stock market does not mean “no loss.”

It means:

Lower chance of big loss
Better ability to recover over time

Safety increases with time, discipline, and diversification.

Volatility

Volatility shows how sharply prices move up and down.

High volatility:

Faster price changes
More emotional pressure

Low volatility:

Slower movements
More stability

Volatility is uncomfortable, but normal.

Diversification

Diversification means spreading money across different companies or sectors.

Simple idea:
Don’t put all your money in one stock.

If one stock falls, others can balance it.

Concentration

Concentration means putting too much money into one stock or one sector.

This increases risk.

Beginners should avoid heavy concentration.

Long-Term Investing

Long-term investing means holding shares for many years.

Time helps:

Reduce short-term volatility
Allow compounding to work

This is the safest approach for most beginners.

Short-Term Investing

Short-term investing means holding for days, weeks, or months.

Prices are more affected by:

News
Emotions
Market mood

Risk is higher compared to long-term investing.

Capital Protection

Capital protection means focusing on not losing your original money.

It matters more than chasing high returns, especially in the beginning.

Stop Loss

A stop loss is a pre-decided price where you exit to limit loss.

It is like an emergency brake.

Used mainly by traders, not necessary for long-term investors.

Drawdown

Drawdown is the fall from the highest value of your investment to the lowest point.

Temporary drawdowns are common.

What matters is recovery over time.

Margin

Margin means borrowing money from the broker to trade more.

This increases both profit and loss.

Margin trading is risky and not suitable for beginners.

Leverage

Leverage is using borrowed money to increase position size.

Small price movements can cause big losses.

Leverage should be avoided by beginners.

Panic Selling

Panic selling means selling out of fear when prices fall suddenly.

This often locks in losses unnecessarily.

Most beginners lose money due to panic, not bad companies.

Market Timing

Market timing means trying to buy at the lowest and sell at the highest point.

It sounds simple but is very difficult in real life.

Even experienced investors struggle with timing.

Risk Appetite

Risk appetite means how much loss you can mentally and financially handle.

Everyone’s risk appetite is different.

Invest only in a way that lets you sleep peacefully.

Hedge

A hedge is an action taken to reduce possible loss.

Advanced concept.
Not required for beginners.

Stock Market Word	Meaning / Definition	Notes or Example (Only Where Needed)
Risk	Chance of losing money	Every investment has some risk
Safety	Lower chance of big loss	Does not mean zero loss
Volatility	Speed and size of price movement	Sharp ups and downs
Diversification	Spreading money across investments	Don’t put all money in one stock
Concentration	Too much money in one place	Increases risk
Long-Term Investing	Holding shares for many years	Reduces stress over time
Short-Term Investing	Holding shares for short periods	More affected by news
Capital Protection	Focus on not losing original money	Important for beginners
Stop Loss	Pre-set exit to limit loss	Emergency exit tool
Drawdown	Fall from highest value to lowest	Temporary declines are common
Margin	Borrowing money to trade	Increases loss risk
Leverage	Using borrowed money for bigger trades	Small moves cause big losses
Panic Selling	Selling due to fear	Often locks in losses
Market Timing	Trying to buy low and sell high	Very difficult in reality
Risk Appetite	How much loss you can handle	Different for each person
Hedge	Action taken to reduce loss	Advanced concept
Capital Allocation	Deciding how money is spread	Helps control risk

Capital Allocation

Capital allocation means deciding how much money goes into each investment.

Good allocation reduces stress and improves discipline.

Section 6: Company Size, Value & Share Structure Terms

These terms help you understand how big a company really is, beyond just its share price.

Market Capitalisation

Market capitalisation (market cap) shows the total value of a company in the stock market.

Formula:
Market Cap = Share Price × Total Number of Shares

A high share price does not mean a big company.
Market cap tells the real size.

Large-Cap Company

Large-cap companies are very big, well-established businesses.

They usually:

Are leaders in their industry
Have stable earnings
Grow slowly but steadily

Generally considered safer than smaller companies.

Mid-Cap Company

Mid-cap companies are medium-sized businesses.

They are:

Past the risky stage
Still growing

Returns can be higher than large-cap, but with more ups and downs.

Small-Cap Company

Small-cap companies are smaller or newer businesses.

They can:

Grow very fast
Fall very fast

Risk is high, rewards can be high.
Not beginner-friendly without experience.

Share Price

Share price is the cost of buying one share.

Share price alone does not show company size or quality.

A ₹50 share can belong to a big company.
A ₹2,000 share can belong to a smaller one.

Share Price vs Company Value

Company value depends on:

Total shares
Market cap

Not just share price.

This is one of the most misunderstood concepts by beginners.

Outstanding Shares

Outstanding shares are the total number of shares a company has issued.

Market cap depends directly on this number.

Face Value

Face value is the original value assigned to a share by the company.

It has little importance for everyday investing. Used mainly for accounting and corporate actions.

Promoter

Promoters are the original founders or controlling owners of the company. They usually hold a large portion of shares.

Promoter Holding

Promoter holding shows how much stake promoters still own.

Higher holding often shows confidence, but very high or very low levels both need context.

Public Shareholding

Public shareholding is the portion of shares owned by common investors.

This includes retail investors, mutual funds, and institutions.

Free Float

Free float is the portion of shares freely available for trading.

Higher free float usually means better liquidity.

Dividend

A dividend is a part of profit shared with shareholders.

Not all companies pay dividends.

Some reinvest profits to grow faster.

Dividend Yield

Dividend yield shows dividend income as a percentage of share price.

Useful for income-focused investors, not growth seekers.

Bonus Shares

Bonus shares are extra shares given for free to existing shareholders.

Your number of shares increases, but total value remains almost the same initially.

Stock Split

Stock split increases the number of shares by reducing the share price.

It improves affordability and liquidity.

Company value does not change due to a split.

Book Value

Book value is the value of a company based on its balance sheet.

It shows what remains if all assets are sold and debts paid.

Price-to-Book (P/B)

P/B compares share price with book value.

Used mainly in banking and asset-heavy companies.

Valuation

Valuation means deciding whether a stock is expensive or cheap.

There is no single perfect valuation method.

Valuation is part math, part judgment.

Undervalued

Undervalued means the stock price is lower than its perceived worth.

This does not guarantee price will rise quickly.

Overvalued

Overvalued means the stock price is higher than its perceived worth.

Overvalued stocks can remain high for long periods.

Stock Market Word	Meaning / Definition	Notes or Example (Only Where Needed)
Market Capitalisation	Total value of a company in the stock market	Share price × total shares
Large-Cap Company	Very large, established company	Generally more stable
Mid-Cap Company	Medium-sized growing company	Balance of risk and growth
Small-Cap Company	Smaller or newer company	High risk, high potential
Share Price	Price of one share	Does not show company size
Share Price vs Company Value	Share price is not company size	Market cap shows real size
Outstanding Shares	Total shares issued by a company	Used to calculate market cap
Face Value	Original value of a share	Mostly for accounting
Promoter	Founder or controlling owner	Manages company decisions
Promoter Holding	Shares owned by promoters	Shows ownership confidence
Public Shareholding	Shares owned by public investors	Includes retail and institutions
Free Float	Shares available for public trading	Higher = better liquidity
Dividend	Profit shared with shareholders	Not guaranteed every year
Dividend Yield	Dividend as percentage of share price	Used by income investors
Bonus Shares	Extra shares given free	Share count increases
Stock Split	Share price reduced by increasing shares	Improves affordability
Book Value	Value based on company assets	Balance-sheet based
Price-to-Book (P/B)	Share price compared to book value	Common in banks
Valuation	Judging if stock is cheap or costly	No single perfect method
Undervalued	Price below perceived value	May not rise immediately
Overvalued	Price above perceived value	Can stay high for long

Final Words: You Don’t Need to Know Everything to Start

If this glossary felt long, that’s normal.

The stock market has its own language, and you’ve just learned the most important parts of it. You don’t need to remember every term today. Most investors don’t.

What matters is:

You now understand the basics
Market movements won’t sound scary anymore
News headlines will feel clearer
You know where to come back when confused

Reading this once already puts you ahead of many first-time investors.