Stock Market Terms Every Beginner Must Know (A–Z Glossary)

If you’re new to the world of investing, the stock market can feel overwhelming with all its unfamiliar terms. Don’t worry — we’ve created a simple A to Z glossary to help you confidently understand and navigate the financial world.

Bookmark this guide and refer to it whenever you come across a confusing term.

A to Z Stock Market Glossary for Beginners

A – Ask Price

The ask price is the lowest price a seller is willing to accept for a stock. It’s one side of the stock’s price quote, the other being the bid price. If you want to buy shares immediately, you must pay the current ask price.
Example: If a stock’s ask price is ₹150, you’ll need to pay ₹150 or more to purchase it right away.

B – Bid Price

The bid price is the highest price a buyer is willing to pay for a stock. It’s the counterpart to the ask price in a stock quote.
Example: If the bid price for a stock is ₹145, you’ll get ₹145 per share if you sell right now.

C – Capital Gains

Capital gains are the profits earned when you sell a stock at a higher price than you bought it for.
Example: If you buy a share at ₹200 and sell it at ₹250, your capital gain is ₹50 per share.

D – Dividends

Dividends are a portion of a company’s profits shared with its shareholders.
Example: If a company declares a ₹5 dividend and you own 100 shares, you’ll receive ₹500 as a payout.

E – Equity

Equity represents ownership in a company.
Example: Owning 100 shares of a company with 10,000 total shares means you own 1% of that company’s equity.
Note: Equity holders benefit when the company grows.

F – Futures Contract

Futures are contracts to buy or sell an asset at a predetermined price on a future date.
Example: You agree today to buy 100 shares at ₹500 next month, expecting the price to rise.

G – Growth Stock

Growth stocks are shares of companies expected to grow faster than average.
Example: A tech startup that reinvests earnings and increases revenue rapidly may be a growth stock.

H – Holding Period

The time between when you buy and sell a stock.
Example: Buying on 1st Jan and selling on 31st Dec gives you a 12-month holding period.

I – Intraday Trading

Buying and selling stocks within the same trading day.
Example: Buy at ₹100 in the morning and sell at ₹105 by afternoon.

J – Junk Bonds

High-yield bonds with lower credit ratings and higher risk.
Example: A struggling company may issue junk bonds offering higher returns to attract investors.

K – KYC (Know Your Customer)

A verification process to confirm investor identity and prevent fraud.
Example: Submitting ID and address proof when opening a trading account.

L – Liquidity

The ease with which an asset can be converted to cash.
Example: Stocks of large companies are highly liquid due to active trading.

M – Margin Trading

Borrowing money to buy more stocks than you can afford with your own capital.
Example: With ₹10,000 of your own and ₹10,000 borrowed, you can invest ₹20,000.

N – NAV (Net Asset Value)

The value per share of a mutual fund or ETF.
Example: Assets of ₹10M minus liabilities of ₹1M with 1M shares = NAV of ₹9.

O – Open Price

The price at which a stock first trades when the market opens.
Example: If a stock opens at ₹200, that’s the open price for the day.

P – P/E Ratio (Price-to-Earnings Ratio)

A valuation metric comparing stock price to earnings.
Example: Price ₹200 / EPS ₹10 = P/E ratio of 20.

Q – Q1, Q2, Q3, Q4

Financial quarters used to report company performance.
Example: Q1 = Apr–Jun, Q2 = Jul–Sep, Q3 = Oct–Dec, Q4 = Jan–Mar (India fiscal year).

R – Resistance Level

A price level at which a stock tends to stop rising.
Example: If a stock keeps failing to go above ₹500, that’s its resistance level.

S – SIP (Systematic Investment Plan)

Investing fixed amounts in mutual funds regularly.
Example: ₹2,000/month SIP can grow significantly over time due to compounding.

T – Technical Analysis

Using charts and indicators to forecast stock price movements.
Example: A moving average crossover can signal when to buy or sell.

U – Upper Circuit

The maximum price a stock can reach in a day as set by the exchange.
Example: Stock with 10% circuit and open at ₹100 can’t go beyond ₹110 that day.

V – Volatility

The degree of variation in a stock’s price over time.
Example: A stock swinging between ₹100 and ₹150 is highly volatile.

W – Watchlist

A list of stocks you’re monitoring for potential investment.
Example: Add Infosys, TCS, and Reliance to your watchlist for daily tracking.

X – X-Dividend Date

The cut-off date to qualify for a dividend.
Example: If X-dividend date is April 25, buy before this to receive the dividend.

Y – Yield

Return from a stock (usually via dividends), shown as a percentage.
Example: ₹10 dividend on ₹200 stock = 5% yield.

Z – Z-Score

A measure of a company’s financial health and bankruptcy risk.
Example: Z-score below 1.8 may indicate high financial distress risk.

Understanding stock market terms is the first step toward confident investing. With this glossary, you’re better equipped to read market news, make smarter decisions, and build long-term wealth.

Frequently Asked Questions (FAQs)