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Finance GlossaryEquity Market
Equity Market
Definition of Equity Market
The Equity Market is a place where shares are traded, money is raised, and stock is offered to investors. That's why it is divided into two categories:
- Primary Market: An equity market where shares are offered to investors for the first time through IPOs while fundraising also happens through private placements.
- Secondary Market: An equity market where shares, bonds, futures, options, more are traded
The primary market is typically over the counter but may be regulated in the case of exchange traded IPOs. The secondary market is often well-regulated as most securities listed are exchange traded.
Related Terms
Margin Trading
Margin trading is a strategy that involves borrowing funds from a broker to take bigger positions in stocks, commodities, currencies, futures, or options.
Yield Curve
The yield curve is a graphical representation showing yields of bonds with different maturities. A normal upward-sloping yield curve indicates higher returns for long-term bonds, while an inverted yield curve, where short-term yields exceed long-term yields, often signals expectations of economic slowdown or recession.
Triple Bottom
A triple bottom is a bullish chart pattern where the price tests the same support level three times without breaking below it. This suggests selling pressure is reducing, and a reversal from downtrend to uptrend may follow.
For example, if a stock falls to ₹200 on three occasions and rebounds each time, it may form a triple bottom, suggesting a potential price rise.
Commodity Options
A commodity option is a contract that gives the buyer or seller the right but not the obligation to execute a trade for a commodity like copper, cotton, zinc, and others at a pre-agreed price and date. Commodity options are derivative contracts that require a trader to pay a premium in order to secure the “option”.
Doji Pattern
A Doji is a candlestick pattern that is formed when the open and close price of a share or market is identical. The word Doji means indecision in Japanese, which is fitting because the Doji pattern is an indicator of indecisiveness. In terms of appearance, a Doji looks like a cross or like the letter T.
Capital in Trading
Capital is the total amount of money that a trader can use to buy and sell securities. There are variations of the term, the most common one is “starting capital”. This is the amount of money a trader starts their journey with.
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