How can you make trades with confidence if you do not understand what a limit order or stop loss is? Additionally, you run the risk of missing the very market movements you are trying to identify if you are constantly stopping to Google every new term.
From the fundamentals to the slightly more complex, this guide deconstructs the most often used terms in stock broking and investing so you can confidently and clearly communicate in the language of the markets.
Important Terms for Stock Broking
A vocabulary of key terminology used by stock brokers and stock market brokers is provided below, arranged by category for convenience.
Participants and the Account
Purchasing and selling stocks or other assets through a registered intermediary, such as a stock market broker, is known as stock broking.
Stock Market Broker: A Securities and Exchange Board of India (SEBI) registered intermediary who facilitates trades on behalf of investors. You must use a stock market broker to place transactions because you cannot do it directly in the market. Brokers offer different degrees of research, advisory, and technical tools, and they can be full-service or discount brokers.
Demat Account: A dematerialized account, or "demat account," is an account that stores your shares and securities in a digital or electronic format. A Depository Participant (DP) opens it.
Trading Account: Used to make stock market buy or sell orders. It is connected to your bank account and demat account.
Depository: A central organization that stores securities digitally is called a depository. NSDL and CDSL are the two primary depositories in India.
Depository Participant (DP): An agent of the depository where you open and manage your demat account is known as a Depository Participant (DP). These days, the majority of trading apps and platforms serve as both a DP and a stock market broker, enabling you to purchase, sell, and hold securities in one location.
