Before you learn to trade in the stock market first, you have to learn what is Stock Market? And before that, you have to know about what is Market?
Meaning of Market
A market is a place or a platform where buyers and sellers come in contact with each other for the purchase and sale of goods & services. 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 are 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 main stock exchanges in India where the majority of the trades take a place. 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 queuing up to be transacted on a stock market or other trading platform. It is useful for traders to see where the weight of bids and offers lies for any security.
Market depth will help you scalp profits and also market depth analysis is very useful when you 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?
Spread is simply the difference between the bid rate and ask rate. The difference in price between someone buying a stock and someone selling a stock represents the bid-ask spread for the exam. Both the bid and ask prices are displayed in real-time and are constantly updating. When a bid & ask prices are matched the orders are placed or execute.
Let’s take an example- if stock ABC has best buy price at Rs.2000 and best sell price at 2090 so that bid-ask spread is equal to (2000-2090)= 10Rs and percentage spread will be equal to (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 the different price point.
The difference between the bid price and ask price is very small value for example 0.5(Show in below pic.) is the difference. The smaller your bid-ask spread the higher the liquidity of the stock and it’s going to be vice versa for a bigger value.
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. 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 quantity. These are the total number of shares in the market and 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 the number of buyers and sellers at each price level.
What is LTP?
Instead, commodities traded on the stock market have what is known as the LTP of the stock or the stock's Last Traded Price. This indicates the most recent price that this stock was bought and/or sold at.
The LTP meaning resides in its variations, as the LTP of stock varies throughout its lifetime. See in the above Pic. Reliance stock LTP is shown as 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 lesser than the 2026.95 then you can place an order for a lesser value but your order will be processed only 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 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 shows 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 defined as, “the number of shares or contracts traded in a security or an entire market during a given period of time.” Volume is the number of shares or contracts traded in a security or an entire market during a given period of time. 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
It 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 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. Let’s see in the above pic. Reliance share is open at 2008.50 and the previous day’s close is 2024.05.
High & Low price
The high is the highest price at which a stock is traded during a period. The low is the lowest price of the period. A stock's high and low points for the day are often called it's intraday high and low. In the above pic. Reliance share 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 ‘lower Circuit’ when there are only sellers and no buyers. This can happen if there is some bad news related to the company.