Aug 29, 2024
By: Prerna Tyagi
Unlike a bear market, a bull market is marked by rising stock prices, often driven by strong economic indicators and investor confidence. In such markets, shares tend to appreciate, making it an attractive time to invest.
A bear market is when stock prices decline, typically by 20% or more, over a prolonged period. It reflects widespread pessimism, with investors selling off shares, fearing further declines.
In simple words, capital gains refer to the profit made when you sell an investment for more than you paid for it. For example, if you buy a share for ₹50 and sell it for ₹70, your capital gain is ₹20.
Dividends are payments made by a company to its shareholders, typically from profits. They provide a steady income stream and are a sign of a company’s financial health.
Going long means buying a stock with the expectation that its price will rise. Going short is the opposite—you sell a stock you don’t own, hoping to buy it back later at a lower price, pocketing the difference.
Diversification is a risk management strategy where you invest across different assets or sectors. The simple idea is to not put all your eggs in one basket. By diversifying, you reduce the impact of poor performance in any one area on your overall portfolio, therefore mitigating risk.
A market index tracks the performance of a group of stocks, representing a specific sector or the market as a whole. Indices help investors gauge market trends and plan their portfolios.
Arbitrage involves buying a stock in one market where it’s cheaper and selling it in another market where it’s more expensive, pocketing profit from the price difference. This is a quick process to take advantage of the momentary price gap.
A market order is an instruction to buy or sell a stock immediately at the best available price. A limit order, however, sets the maximum or minimum price at which you’re willing to buy or sell.
Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price. High liquidity means there are many buyers and sellers, so transactions happen quickly at stable prices.