Stock Market Basics for Beginners, You Need to Know

Stock Market Basics for Beginners: You Need to Know

We all can trade in the stock market but we have to understand what to do and beginners think that we will make quick money by coming to the stock market but the reality is different, profitable or profit in the market is achieved by those who first learn the basics of the market, if we do not understand the market then it will be as if we are wandering in the jungle without a map, hence we should study and understand this also,

If we become clear about the basics, then one thing is permanent in the market, and that is loss, but if we know that loss will come under control, so what a beginner should know, I will share everything with you in this article, Stock Market Basics for Beginners, You Need to Know.

What Is Stock?

Stock is a small part of the ownership of a company; that is, when we buy stock of a company, we become a small owner of that company, that is, we become a part-owner. Meaning, if we buy stock of the company, if the company makes a profit, then we will get a small part of its profit, it is like a Dividend, and as the performance of the company is good, Then in the coming time the stock price will increase, then we will also get money for that, which we call Capital gain.

But if the company makes a loss, the market falls, then our value will also fall there. If I were to tell you in simple terms, stock, that we buy stock, I would become a small shareholder of that company.

What Is the Stock (Share) Market?

Stock market is a place where people buy and sell shares of the company, there is buyer and sellar, for an example suppose this is a vegetable market, the only difference is that in vegetable market we get vegetables, here we get shares, when a company wants to raise money for its business, then it offers its shares to the public, this process is called IPO (Initial Public Offering), when you buy these shares then you become a owner of this stock,

There are only two exchanges in India. NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). where all the trading takes place. The purpose of the stock market. To provide a single platform to the investor and the company, where both can achieve their goals, the company can raise funds, and the investors can grow their money.

Stock Indexes: What Are They?

There is an index that shows a list of some major companies, meaning you say that an index is formed by combining all the stocks of big stars. This index shows us how the market performed today. Stock Market Basics for Beginners: You Need to Know for example.

Sensex — consists of 30 major companies on the Bombay Stock Exchange
Nifty 50 — covers 50 top stocks on the National Stock Exchange
Sectoral indices like Nifty IT, Nifty FMCG, etc.
Market-cap indices like BSE Midcap, BSE Smallcap, etc.

Most Financial Tools Commonly Used by Traders & Investors

When we trade or do any work regarding trading, we will need all these tools.

Trading platforms — Software/apps to place orders, check quotes, and view portfolios. ( Like Tradingview )
Charting tools — Visual graphs, technical indicators (moving averages, RSI, etc.).
Screeners/filters — To narrow down stocks meeting your criteria (P/E ratio, sector, volume).
Backtesting tools — Test strategies on historical data to evaluate performance.
News and research platforms — Keeping up with earnings, macro data, policy changes, etc. ( Like Namosbull )

25 Must-Know Terms for Stock Market Beginners

Whatever I am mentioning here is very important for a new trader and investor to know because this is what you all need to know in the first step.

Demat Account – Holds securities in electronic (dematerialised) format.
Bull Market – A market trending upward, with rising prices.
Bear Market – A market trending downward, with falling prices.
Portfolio – The collection of investments you hold
Diversification – Spreading investments across assets to reduce risk.
Market Capitalisation (Market Cap) – Total value of a company’s shares (share price × number of shares)
Dividend – Profit distribution to shareholders
Blue-chip Stocks – Shares of well-established, stable companies.
Volatility – The degree of variation in a stock’s price over time.
IPO — Initial Public Offering — first time a company offers shares to the public.
Broker — A person or entity that executes buy/sell orders for investors.
Bid & Ask — Bid is the price someone is willing to buy; ask is the price someone is ready to sell.
P/E Ratio (Price-to-Earnings Ratio) — Valuation metric (Share Price ÷ Earnings per Share)
Market Order — Buy or sell at the current market price immediately.
Limit Order – Buy or sell at a specified price or better.
Index – Benchmark representing a set of stocks.
ETF (Exchange-Traded Fund) – A fund holding multiple underlying assets, traded on exchanges.
Day Trading – Buying and selling within the same trading day.
Liquidation – Selling assets (or business winding up) to satisfy obligations.
Resistance Level – A price where selling pressure may limit upward movement.
Support Level – A price at which buying interest may halt downward movement.
Dividend Yield – Dividend expressed as a percentage of share price.
Capital Gain – Profit from selling an asset at a higher price than purchased.
Stock Split – Corporate action increasing the number of shares, reducing the price proportionally.
EPS (Earnings Per Share) – Net earnings divided by the number of outstanding shares.

A Little Extra Tip & Observations

Understand your risk tolerance – If you cannot control the risk in the stock market, then it would be better to learn first and then invest.
Focus on fundamentals & valuation – A company’s financial health (revenue growth, margins, debt levels) matters, not just hype.
Avoid timing the market – We cannot always predict when a stock will move up or down, so timing is most important. We should trade stocks when the market is trending.
Reinvest dividends – Especially in long-term investing, reinvesting dividends can significantly boost returns via compounding.
Stay updated on macro trends – Interest rates, inflation, global events, and government policies deeply affect markets.
Maintain a long-term perspective – The market has cycles; patience often rewards.
Use stop-losses (for active trading) – This helps contain downside by predefining an exit point.
Costs matter – Brokerage fees, transaction costs, and taxes eat into returns.

Finalize

The stock market is a powerful tool where we create wealth, but we also have to take risks. When you want to enter the stock market or trade, you have to keep this in mind.

Define your goals, time horizon, and risk tolerance.
Do research — study financial statements, understand the business.
Start gradually — use small amounts initially, learn from experience.

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