Before you learn to trade in the stock market first, you have to know what Stock Market is. And before that, you have to know about what a Market is.
Meaning of Market
A market is a place or a platform where buyers and sellers come in contact with each other. And where the purchase and sale of goods & services take place. The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product. Buyers and sellers meet and, at the right price, all products get sold.
Meaning of stock market
The stock market is similar to a market where buyers and sellers come in contact with each other to purchase and sell the shares of publicly listed companies. The buyers and sellers buy or sell the shares through the exchange. There are two stock exchanges in India where the majority of the trades happen. Bombay Stock Exchange(BSE) and National Stock Exchange(NSE).
Securities and Exchange Board Of India(SEBI) is a statutory regulatory body established on the 12th of April, 1992. It monitors and regulates the Indian capital and securities market while ensuring to protect the interests of the investors, formulating regulations and guidelines. The head office of SEBI is at Bandra Kurla Complex, Mumbai.
What is Market Depth?
Market depth describes a real-time electronic list of all the buying and selling orders queued up for transactions on a stock market or other trading platform. It helps traders to see where the weight of bids and offers lies for any security. Market depth will help you scalp profits. Market depth analysis is also helpful if you are placing a large quantity.
What Is Bid Or Ask Price?
Bid Price (Buy Price)
A bid of stock represents the highest amount of price that someone/investor is willing to pay for shares of that stocks, securities, or assets.
Ask Price (Offer Price)
The ask price is the highest price that someone/investor is willing to sell the securities, stocks, or assets.
What Is Bid-Ask Spread?
It is simply the difference between the bid rate and the ask price. The difference in price between someone buying a stock and someone selling a stock represents the bid-ask spread. Both the bid and ask prices are displayed in real-time and are constantly updating. When a bid and ask prices are matched, the orders are placed or executed.
Let us take an example.
The stock ABC has the best buy price at Rs. 2000 and best sell price at 2090. So the bid-ask spread is (2000-2090)= 10Rs. And the percentage spread is (10/2000*100) = 0.05%.
There can be various buyers and sellers in the market and, they may be willing to buy/sell any security at different price points.
The difference between the bid price and ask price is a small value, for example, 0.5 (as shown in the below image). The smaller your bid-ask spread, the higher the liquidity of the stock, and vice versa for bigger spread value.
In the above image, buyers are on the left and sellers on the right. Notice that the buying price increases as we go from the bottom of the screen to the top. Whereas on the sell side, the price decreases from the bottom to the top. The buyers are moving closer to the sellers or the current market price and vice versa.
The middle column is the quantity that represents the total number of shares to be bought and sold at each price level. The outer columns show the number of buyers and sellers in the market and at each price level.
What is LTP?
The LTP is the Last Traded Price of the stock. LTP indicates the most recent price at which the stock was recently bought or sold.
The LTP meaning resides in its variations, as the LTP of stock varies throughout its lifetime. In the above image, Reliance stock LTP is 2026.95. If anybody wants to buy at that particular time when it shows LTP as 2026.95 then they should buy at 2026.95 only (Market Price). If you want to buy a share at price lesser than 2026.95, you can place an order. But your order gets executed when LTP comes to your offered price.
What is LTQ?
The total of all the shares of a particular company bought and sold in a particular trading session is termed as the Total Traded Quantity (TTQ) of that company. It is also referred to as the Volume of trade of that stock or Traded Volumes of that Stock. The total LTQ of Reliance is 20 at 2026.95 LTP as shown in the above pic.
What is LTT?
The Last Traded Time (LTT) means when a particular share or contract was last bought or sold. It helps traders know the demand for a particular share on a particular day.
What is Volume?
Volume is the number of shares or contracts traded in a security or an entire market during a given time. Volume is the number of shares or contracts traded in a security or an entire market during a given period. Seen in the above pic. Reliance total volume is 27,77,624.
What is Open price, Close price, High and Low price of the shares?
Open & Close price
The Open price is the price at which the financial security opens in the market when trading begins. It may or may not be different from the previous day's closing price. The security may remain open at a higher price than the closing price due to excess demand for the security. Suppose financial security closes at 1000 on Monday and opens at 1000 on Tuesday. In this case, the open price is the same as the closing price of the previous day. In the above image, for the Reliance share, the open price is 2008.50 and the close price is 2024.05.
High & Low price
The high price is the highest price at which a stock was traded during a period. The low price is the lowest price at which a stock was traded during a period. The high and low points of the stock for the day are often called it's intraday high and low. In the above image, Reliance share is traded at highest at 2036.00 prices and lowest at 2002.25 prices.
What is an Upper circuit?
Upper Circuit is the upper limit for a stock, which cannot be crossed on the day for which it is set. Upper Circuits are changed every day depending on the closing price on the previous day. There are 4 price bands: 2%, 5%, 10% and 20%.For stocks that are under the 10% price band, they can’t rise above 10% or fall below 10%.
For example, if a stock ABC closes at ₹ 500 per share. On the next day, if it is under the 10% price band, then the price cannot fall below ₹ 250 or rise above ₹ 550 per share. If it falls 10% to ₹ 250, it’s called lower circuit and if it rises 10% to ₹ 550, it’s called Upper Circuit.
Stocks hit ‘Upper Circuit’ when there are only buyers and no sellers. This can happen if there is some good news related to the company.
What is a lower circuit?
The Lower Circuit is the lower limit for a stock, which cannot be crossed on the day for which it is set. Lower Circuits are changed every day depending on the closing price on the previous day.
Stocks hit the lower circuit when there are only sellers and no buyers, which can happen if there is some bad news related to the company.