Mastering Long and Short Positions: Essential Stock Market Concepts
Hi, welcome to your website Finance Gurukul. today we will know about some Stock Market Jargons which is commonly used. So, read full details in this article about these jargons.
The objective of this Article is to help you learn some of the common market terminologies, and concepts associated with it.
Bull Market (Bullish) – If you believe that the stock prices are likely 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 believe that the stock prices are likely 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.
Trend – A term ‘trend’ usually refers to the general market direction, and its associated strength. For example, if the market is declining fast, the trend is said to be bearish. If the market rising fast, the trend is said to be bullish. If the market is trading flat with no movement, then the trend is said to be sideways.
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 and stock split are announced they are issued keeping the face value in perspective. For example, the FV of Tata Power is 5, and if they announce an annual dividend of Rs.63 that means the dividend yield is 1260%s (63 divided by 5).
52 weeks high/low – 52 weeks high is the highest point at which a stock has traded during the last 52 weeks (which also marks a year) and likewise 52-week low marks the lowest point at which the stock has traded during the last 52 weeks. The 52-week high and low gives a sense of the range within which the stock has traded during the year. Many people believe that if a stock reaches 52 weeks high, then it indicates a bullish trend for the foreseeable future. Similarly, if a stock has hits 52 weeks low, some traders believe that it indicates a bearish trend for a foreseeable future.
All time high/low – This is similar to the 52-week high and low, with the only difference being the all-time high price is the highest price the stock has ever traded from the time it has been listed. Similarly, the all-time low price is the lowest price at which the stock has ever traded from the time it has been listed.
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 Tata Power shares then you are said to be long on Tata Power or planning to go long on Tata Power respectively. If you have bought the Nifty Index with an expectation that the index will trade higher then essentially you have a long position on Nifty. If you are long on a stock or an index, you are said to be bullish.
Short Position – A short position, also known as being short on a stock, is an investment strategy in the stock market where an investor borrows shares of a company they believe will decrease in value, with the intention of repurchasing them at a lower price later and returning them to the lender. This allows the investor to potentially profit from the decline in the stock’s price.
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