Beginners Stock Trading – Basic Stock Terminology
Stock terminology can get confusing in beginners stock trading. It is not that the terms are misleading, but more because there are so many of them to know. If you take the time to learn a few of these beginners stock trading key words at a time, you’ll be set in no time! Below is a list of the most common terms that you should be familiar with.
Market / Stock Market / Stock Exchange – An exchange where professional brokers buy and sell stocks. I recommend sticking to the NYSE, Dow Jones, and Nasdaq for beginners stock trading.
Trading Hours – The time during which stocks can be traded. In the US, trading runs from 9:30am ET to 4:00pm ET.
Market Maker / MM – A firm that conducts the trading of shares between other firms or individuals.
Ticker Symbol – A unique letter-based symbol used to represent the company’s stock.
Share – A unit of ownership of a company’s stock.
Authorized Shares – The total number of shares that a company has.
Outstanding Shares – Shares that are available to buy or sell in the market.
Restricted Shares – Shares that cannot be traded for a certain period of time.
Float – Shares that are available for trade by the investing public.
Buy – To purchase shares of a company’s stock.
Sell – To sell shares of a company’s stock.
Commission – A fee paid to your broker for facilitating a purchase or sale of stock.
Bid – The price at which a broker will buy shares (i.e. a sale of shares would be executed at the Bid price).
Ask – The price at which a broker will sell shares (i.e. a purchase of shares would be executed at the Ask price).
Spread – The difference between the Bid and the Ask prices.
Day Order – An order to buy or sell stock that will be canceled if it does not get filled by the end of the trading day.
Good Til Canceled / GTC – An order to buy or sell stock that will remain open for 30 to 60 days (varies by broker).
Limit Order – An order to buy or sell stock that will not go through until the price gets to a specified level, or better.
Trend – The general direction that a stock is moving…upward or downward.
Bearish – Describes a stock that is expected to trend downward.
Bullish – Describes a stock that is expected to trend upward.
These few terms will give you a good start in beginners stock trading. It is easier to talk about the stock market if you understand these basic stock terms. Learning them will help in your discussions, your research, and in understanding the helpful tools out there.