Bullish and bearish
Before any other word, learn these two. They describe a direction and a mood, nothing more.
Someone who is bullish thinks prices are going up. A bear thinks prices are going down. The animals are a memory trick: a bull attacks by throwing its horns upward, a bear swipes its paws downward.
When this mood spreads across the whole market for months, we name the weather after it. A long rise is a bull market. A long fall (usually a drop of 20 percent or more) is a bear market.
Tap a mood to see the trend it describes
Rally
A stretch where prices climb fairly quickly. "The stock rallied after the news."
Correction
A drop of about 10 percent from a recent high. Common and usually short.
Crash
A sudden, steep, fast fall. Rare, loud, and remembered by name.
Recovery
The climb back up after a fall. The market has always made new highs eventually, though it can take years.
What you are actually buying
A stock is a tiny slice of ownership in a company. Buy one and you own a sliver of the business, its profits, and its future.
The words below get used loosely and often mean nearly the same thing. Here is what each one points at.
Share / unit
One single unit of a stock. "I own 10 shares of Apple" means 10 slices.
Equity
A fancy word for ownership. Stocks are equities. It just means "a piece of the company."
Dividend
A cash payment some companies send shareholders, usually quarterly. Your slice of the profit.
Market cap
The whole company's price tag: share price times number of shares. Big = "large cap."
Ticker
The short code for a stock. Apple is AAPL, Tesla is TSLA. Like a nickname for trading.
Index
A scoreboard tracking a basket of stocks. The S&P 500 follows 500 large US companies at once.
ETF
A single fund you can buy that holds many stocks inside it. One purchase, instant variety.
Blue chip
A large, well known, financially solid company. Steady rather than thrilling.
Bid, ask, and the spread
A stock does not have one price. At every moment it has two: the most a buyer will pay, and the least a seller will accept.
The bid is the buyer's offer. The ask (or "offer") is the seller's price. The gap between them is the spread. A trade happens when someone agrees to cross that gap.
Drag the buyers and sellers closer to make a deal
A narrow spread (a penny or two) means the stock is easy to trade: lots of buyers and sellers, what traders call liquid. A wide spread means few people are trading it, so you pay more just to get in and out. Volume is the count of shares traded in a day, and high volume usually goes hand in hand with tight spreads.
Order types
When you buy or sell, you send an order. The type of order decides how it gets filled. Picking the wrong one is a classic beginner mistake.
Pick an order, set your number, then run the market
Market order
"Buy or sell right now, whatever the price." Fast and certain to fill, but you take the price you get.
Limit order
"Only fill at my price or better." You control the price, but it might never fill.
Stop loss
"If the price falls to here, sell me out." A safety hatch that caps how much you can lose.
Stop limit
A stop that turns into a limit order. Safer on price, but it can fail to fill in a fast drop.
Anatomy of a candlestick
Most price charts are drawn as candlesticks. Each candle packs four numbers from one time slice (a day, an hour, a minute) into a single shape.
Tap each label to light up the part it names.
Going long, going short
There are two directions you can profit from, not one.
To go long is the normal thing: buy low, hope it rises, sell high. Almost everyone is "long" their investments.
To go short is the mirror image. You borrow shares, sell them now, and hope to buy them back cheaper later, pocketing the difference. It profits when prices fall. It is also far riskier: a stock you own can only fall to zero, but a stock you shorted can rise without limit, so your possible loss is uncapped.
Support and resistance
Prices often seem to bounce inside an invisible room. The floor is support, the ceiling is resistance.
Support is a price level where buyers keep stepping in, so the fall stalls. Resistance is a level where sellers keep appearing, so the rise stalls. When price finally pushes through a ceiling, traders call it a breakout.
Watch the price test the floor and the ceiling
These levels are not magic, they are crowd psychology. Enough people remember a price and act on it that the memory becomes self fulfilling, until it does not.
Shapes the crowd keeps drawing
Because human psychology repeats, prices tend to trace the same shapes again and again. Traders give these patterns names and use them to guess what might come next.
Two quick families. A reversal pattern hints the trend is about to flip. A continuation pattern hints at a pause before the trend resumes. Tap through the gallery and watch each one draw itself.
Tap a pattern to see its shape and what traders read into it
A few candlestick signals
Patterns also show up in a single candle or a pair of them. These are the ones you will hear named most often.
Doji
Open and close almost equal, with long wicks. A standoff where buyers and sellers fought to a draw. Often a pause before a turn.
Hammer
A small body with a long lower wick. Sellers pushed price down hard, then buyers slammed it back up. Read as bullish.
Bullish engulfing
A big up candle completely swallows the prior down candle. Buyers seized control in a single session.
Shooting star
A small body with a long upper wick. Buyers tried to push up but got rejected. Read as bearish.
Practical notes before you trust any pattern
Patterns are suggestive, never certain. These habits keep them from leading you off a cliff.
Zoom out first
The trend on the weekly chart matters more than the wiggle on the 5 minute one. Check the wider view before reacting.
Volume confirms
A breakout on heavy volume is believable. The same move on light volume often fizzles out.
Wait for the close
Prices spike and fake out during the day. The closing price is the one that actually counts.
Plan for failure
Even textbook patterns work only some of the time. Always pair a trade with a stop loss.
Do not force it
If you have to squint to see the pattern, it is not there. The clearest setups are the safest.
One signal is a guess
A pattern, rising volume, and a support level all agreeing makes a case. Any one alone is a coin flip.
Time frame sets the stakes
A shape on a monthly chart means far more than the same shape on a one minute chart.
Odds, not promises
Patterns tilt the probabilities a little. Nobody can truly see the future inside a chart.
Is this a good company at a fair price?
There are two ways people size up a stock. Technical analysis reads the charts and patterns we just covered. Fundamental analysis looks at the actual business and its numbers. Long term investors lean on the second.
It comes down to two questions: is this a good business, and is the price fair for what you get? Price is what you pay. Value is what you get. They are not the same thing.
First, the business
Do you understand it?
If you cannot explain how the company makes money in a sentence, stop here. Stick to what you understand.
Does it have a moat?
A moat is something rivals cannot easily copy: a strong brand, a network, scale, a patent. It protects future profit.
Is it actually profitable?
Real, growing earnings beat exciting promises. Plenty of hyped companies never make a cent.
Will it matter in 10 years?
Is demand for what it sells likely to grow, hold, or fade? Time rewards durable businesses.
Then, the numbers
You do not need to be an accountant. A handful of figures, all visible in any trading app, tell you most of the story.
EPS (earnings per share)
Company profit divided by its shares. The single most watched number. You want it growing over time.
P/E ratio
Price divided by earnings per share. Roughly how many years of profit you are paying for. The headline valuation gauge.
Revenue growth
Is the top line (total sales) rising year over year? Shrinking revenue is a red flag.
Profit margin
How much of each dollar of sales becomes profit. Higher and steady is healthier.
Debt
Some debt is normal. A mountain of it makes a company fragile when times get hard.
Dividend yield
If it pays a dividend, this is the yearly payout as a percent of the price. Income while you hold.
The P/E ratio is the one beginners reach for first, so it is worth a feel for it. Slide the price below and watch the same company look cheap or expensive.
A company earning $5 per share. Slide its price to see the P/E.
One number never decides it alone. A high P/E can be fine for a fast grower, and a low P/E can be a value trap, cheap because the business is dying. Always compare a stock to its rivals and to its own history, not to a magic number.
Deciding to act, and when not to
Most beginner losses come not from picking the wrong stock, but from buying and selling for the wrong reasons at the wrong moments.
When to buy
Good reasons
You understand the business and believe in it for the long term. The price looks fair or cheap versus its earnings and rivals. It fits your plan and timeline. You already know what would make you sell.
Poor reasons
It is trending or a friend tipped it. It already soared and you fear missing out. It dropped, so you assume it must bounce. You are bored and want some action.
When to sell
Good reasons
The reason you bought is no longer true. You genuinely need the money for life. It grew into too large a slice of your portfolio. The fundamentals clearly worsened, or you found a better use for the cash.
Poor reasons
It dipped and you panicked. It rose a little and you got nervous. Someone online told you to. You are reacting to a single scary headline.
Volatility
Volatility measures how wildly a price swings, not which direction it goes. High volatility means big jumps up and down; low volatility means a calm, gentle drift.
Slide from calm to chaotic
More volatility means more chance for fast gains and fast losses. A calm blue chip and a wild penny stock can both end the year flat, but the journeys feel nothing alike. Beta is one common volatility measure: a beta above 1 swings more than the overall market, below 1 swings less.
Dollar cost averaging
Instead of dropping all your money in at once and praying you timed it right, you invest a fixed amount on a schedule, say $200 every month, no matter the price.
When prices are low your fixed dollars buy more shares; when high, fewer. Over time you pay a smooth average and skip the agony of guessing the perfect moment.
$1,200 to invest over a bumpy year. Which way wins?
Why starting early beats starting big
The strongest force in investing is not picking winners. It is compounding: your gains start earning their own gains, year after year.
A small amount invested steadily for a long time usually ends up far larger than the cash you put in. Drag the sliders and watch the gap open up between what you contribute and what it grows into.
A simple compounding estimate. Adjust and watch.
The longer the runway, the more dramatic the effect. This is why the best time to start is usually the soonest one, even with a tiny amount. Returns are never guaranteed, but time is a lever almost anyone can pull.
Diversification
The oldest rule on this page: do not put all your eggs in one basket. Diversification means spreading money across many different holdings so one disaster cannot sink you.
Add holdings and watch how much one bad day can hurt
One stock can go to zero. A spread of twenty unrelated holdings almost never does all at once. The cheapest way for a beginner to own hundreds of companies in one click is a broad index ETF.
Colorful words traders actually say
Markets breed slang. Here are the ones you will hear and what they really mean.
Dead cat bounce
A small, brief recovery in the middle of a big fall. The grim joke: even a dead cat bounces if dropped from high enough. Do not mistake it for a real turnaround.
Bull trap
A fake breakout upward that lures buyers in, then reverses and falls. The "trap" snaps on the optimists.
Bear trap
The opposite: a fake drop that scares people into selling, then snaps back up.
FOMO
Fear of missing out. The itch to buy something only because it is rocketing. Usually the worst reason to buy.
Blue sky / Moon
Wild optimism. "To the moon" means people expect a price to soar. Treat with healthy suspicion.
Bag holder
Someone still clutching a stock that has crashed, hoping it comes back. Do not become one out of stubbornness.
Buy the dip
Buying after a price falls, betting the drop is temporary. Sometimes wise, sometimes catching a falling knife.
Profit taking
Selling after a rise to lock in gains. The polite phrase used when a hot stock cools off.
Ten rules of thumb for beginners
None of these are clever. All of them are earned. If you only remember this section, you will be ahead of most.
Only invest money you will not need soon
The market can stay down for years. Cash you need next year does not belong in stocks.
Time in the market beats timing the market
Staying invested for years usually wins. Jumping in and out usually does not.
Diversify, always
One stock can vanish. A broad basket has never gone to zero. Spread your bets.
Automate the boring part
Invest a fixed amount on a schedule. Removing the decision removes the emotion.
Understand what you own
If you cannot explain it simply, you do not understand it well enough to risk money on it.
Watch the costs
Fees, spreads, and taxes quietly eat returns every year. Cheap and simple usually wins.
Ignore the noise and the FOMO
By the time a tip is loud, you are usually late. Loud crowds are often wrong together.
Have an exit before you enter
Decide why you are buying and what would make you sell, before you click buy.
Never risk what you cannot afford to lose
Avoid borrowed money (leverage) and shorting until you truly know what you are doing.
Your emotions are the most expensive part
Fear sells at the bottom, greed buys at the top. The plan exists to overrule the feeling.
Traps that catch almost everyone
You will dodge most early pain just by recognizing these in advance.
Checking too often
Watching every tick feeds anxiety and tempts you into needless trades. Set things up, then step away.
Panic selling
Selling in a crash locks in the loss. The market's best days often sit right next to its worst ones.
FOMO buying
Buying something only because it already soared usually means arriving near the top.
All in on one stock
A single company can collapse. Concentration is how beginners lose everything at once.
Using money you need
Rent or emergency money in stocks forces you to sell at the worst possible moment.
Good company, bad price
Even a wonderful business can be a poor investment if you overpay to own it.
Ignoring fees and taxes
Frequent trading quietly bleeds returns through costs and tax bills.
Trusting hype
If social media calls it a sure thing, be more suspicious, not less.
Part Two
Trading through an app
You know the words. Now here is the actual workflow: opening an account, placing a buy, watching it fill, selling, and not getting fleeced along the way. The simulator below uses a fictional stock and fake money, so practice freely.
Opening and funding an app account
A trading app is just a friendly front end for a brokerage account, the regulated account that actually holds your money and your shares.
Setting one up follows the same five steps almost everywhere.
Pick a broker app
Look for commission free trades, fractional shares, clear fees, strong security, and investor protection (in the US, that the broker is a SIPC member). Do not choose on flashy design alone.
Verify your identity
By law a broker must collect your legal name, address, and tax ID. This is normal and required, not a scam. Have your documents ready.
Choose an account type
A plain taxable account for general investing, or a tax advantaged retirement account if you are saving for the long term. The exact options depend on your country.
Fund it
Link a bank and transfer cash. Transfers often take a few business days to clear before you can trade with them or withdraw.
Understand settlement
When you sell, the cash is unsettled for one business day (called T+1) before it is truly yours to withdraw. Spending unsettled cash too quickly can trigger violations in a basic cash account.
Placing a buy or sell order
Every app trade is the same handful of taps: find the stock, choose buy or sell, pick an order type, set the amount, review, and submit.
Below is a working order ticket for a fictional company, Acme Robotics (ACME), with $1,000 of pretend money. The price moves on its own. Try a market buy, then a limit buy set below the current price and watch it wait in the working orders, then sell to see your profit or loss.
Real apps add the same review screen before anything is final, showing estimated cost, fees, and remaining buying power. Read it every time. That screen is your last chance to catch a wrong number of shares or a fat finger price.
Cost basis, market value, profit and loss
Once you own a stock, the app shows a position. Three numbers tell the story.
Your cost basis is the total you paid. The market value is what those shares are worth right now. The difference is your profit or loss. While you still hold the shares that gain is unrealized, only on paper. It becomes realized, and taxable, the moment you sell.
You bought 10 shares at $100, so your cost basis is $1,000. Drag today's price.
The level where market value equals cost basis is your break even. Below it you are down, above it you are up. Remember that selling at a gain usually triggers tax, and frequent selling triggers it often.
How long an order lives, and what its status means
When you submit an order you also pick how long it stays alive, and afterward the app reports its status.
Day order
Expires at the end of the trading day if it has not filled. The common default.
GTC
Good till canceled. Stays open for weeks until it fills or you cancel it.
Pending / Working
Sent but not yet filled. Normal for a limit order waiting for its price.
Filled / Partial
Fully done, or only some of your shares traded so far.
Rejected
The app refused it: not enough buying power, market closed, or a bad price.
Canceled
You pulled the order before it filled. No trade happened.
How commission free apps make money
Almost every app advertises zero commission. They still earn from you, just less visibly.
Payment for order flow
The app sells your order to a big trading firm, which may fill you at a slightly worse price than the best available.
The spread
You still cross the bid to ask gap on every single trade. Small, but it adds up with activity.
Currency and transfer fees
Buying foreign stocks, or moving money out, often carries a charge.
Margin and premium tiers
Borrowing money to trade costs interest, and fancy data or features cost a subscription.
Scams, security, and keeping your head
The biggest danger to a beginner is rarely the market itself. It is fraud, and your own impulses.
Lock the account
Use a strong, unique password and two factor authentication. This app guards real money.
Know your protection
In the US, SIPC covers up to $500,000 (including $250,000 cash) if the broker itself fails. It does not cover money lost on bad investments.
Ignore hot tips
Guaranteed returns, crypto giveaways, and DMs with stock picks are almost always scams or pump and dumps.
Distrust the loudest voices
Finfluencers and trending lists profit from your activity, not from your results.
Beware urgency
Any pitch built on buy now or miss out is engineered to switch off your judgment.
The golden tell
No real broker or advisor will ever ask for your password or promise a guaranteed return.
A thirty second pre trade checklist
Run through these every time. If you cannot check them all, you are not ready to place the trade yet.
Practice before real money
Many apps offer paper trading, a full simulator with fake money and real live prices.
Use it for a few weeks. Place orders, fumble the buttons, make every beginner mistake while nothing is at stake. When you do switch to real money, start small. The goal early on is not profit, it is building habits that will not hurt you once the amounts get serious.
A simple starter example
Here is one low stress way a beginner might put a first $500 to work. This is an illustration to make the ideas concrete, not a recommendation.
Many beginners skip picking individual stocks entirely and buy a broad index ETF, a single fund that holds hundreds of companies at once. With fractional shares, $500 is more than enough to start. A simple split keeps most of it invested and a little in cash as a buffer.
One illustrative split of $500
Instantly spreads your money across hundreds of companies, so no single one can sink you.
Dry powder to add later, or to avoid selling if you need a little cash.
A sensible routine from here: fund the account, buy the index ETF, then set a small amount like $50 a month to invest automatically (that is dollar cost averaging), and leave it alone to compound. Add more over time as you learn.
Part Three
Day trading
Buying and selling within the same day. It is the most demanding, most expensive, and statistically least forgiving way to participate in the market. Here is how it actually works, what keeps traders alive, and how to spot trouble, told straight.
What you are actually signing up for
Day trading means opening and closing positions within a single day, profiting from small moves, never holding overnight. It is a different sport from investing.
An investor buys a business and lets years do the work. A day trader trades price wiggles against other traders, many of them professionals with faster tools. Your profit is someone else's loss, minus costs. It is closer to a competitive job than to saving.
The honest odds
Study after study finds that the large majority of day traders lose money over time, and only a few percent stay consistently profitable. Go in knowing this.
The PDT rule
In the US, making 4 or more day trades in 5 business days in a margin account flags you as a pattern day trader, requiring $25,000 minimum equity. Small accounts hit this wall fast.
Costs bite harder
Spreads, slippage, and fees hit every trade, and you make many. Profits are short term capital gains, taxed at your full income rate in most places.
It is a full time job
Real day traders prepare before the open, watch the market for hours, journal every trade, and review at night. It is not a phone hobby between meetings.
The first hours rule
Most of the day's action happens in the first and last hour. Midday is thin and choppy, where beginners bleed money out of boredom.
Paper trade first
Months, not days, of simulated trading before real money. If you cannot profit with fake money, real money will only add fear.
The math that keeps traders alive
Ask any surviving day trader their secret and you will hear the same thing: they manage losses, not wins. Two numbers rule everything.
The one percent rule: never risk more than about 1% of your account on a single trade. Ten straight losses, which happens to everyone, only dents you 10% instead of wiping you out. The risk reward ratio: only take trades where the potential win is at least twice the planned loss (2 to 1). Then you can be wrong more often than right and still come out ahead.
Those two numbers decide your position size, the number of shares to buy. This calculator is the single most practical tool on this page.
Position size calculator. Entry price is $50. Set the rest.
Stop first, always
Decide the exit-if-wrong price before you enter, and place the stop order immediately. Hoping is not a plan.
Daily loss limit
Down 2 or 3% on the day? Stop trading, close the app. Revenge trading after losses is how small holes become craters.
Never average down
Adding to a losing day trade to lower your average is doubling a bet that is already going wrong.
Journal every trade
Entry, exit, reason, feeling. Your journal will teach you more than any guru.
Automating your entries and exits
Your app can watch the price for you. Conditional orders fire automatically when your price hits, which removes the two biggest liabilities in trading: hesitation and emotion.
Sell conditions (protecting a position you hold)
Stop loss
"Sell if it falls to X." Your automatic damage cap. Becomes a market order when triggered, so fast drops can fill a bit lower.
Take profit (limit sell)
"Sell if it rises to Y." Locks the win the instant your target trades, even if you are asleep.
Bracket / OCO
Both at once: a stop below and a target above, and whichever fires first cancels the other (one cancels other). The standard exit for a planned trade.
Trailing stop
A stop that follows the price up at a fixed distance but never moves down. It lets winners run while ratcheting your floor higher.
Buy conditions (entering only on your terms)
Buy limit
"Buy only if it dips to X." The patient entry: you wait for the pullback price you chose.
Buy stop
"Buy only if it rises through Y." The breakout entry: you join only after the level actually breaks, so failed breakouts never fill you.
Stop limit
Either kind of stop that turns into a limit at trigger. Protects your fill price, but can be skipped entirely in a fast gap.
Try a bracket. Entry is $100. Set your stop and target, run the market, and see which side fires. Then switch the stop to trailing and watch it climb behind a winner.
Bracket (OCO) simulator. You are long from $100.
What is tradable, and what is a trap
Day traders do not trade everything. Each morning they scan for a shortlist of stocks in play, ones moving with real fuel behind them.
What makes a stock worth watching
A fresh catalyst
Real news today: earnings, a drug approval, a contract, guidance. Moves need a reason, or they die fast.
Unusual volume
Trading at several times its normal daily volume (high relative volume) means real interest, not noise.
Room to move
Enough volatility that a move can outrun the spread and fees. A stock that barely moves cannot pay you.
A tight spread
A penny or two between bid and ask. You enter and exit constantly, so the spread is a repeated tax.
Liquidity to exit
Enough shares trading that you can get out instantly at a fair price when you need to. Exits matter more than entries.
Clean levels
Respecting obvious support and resistance gives you logical places for entries and stops.
Red flags: walk away when you see these
Promoted anywhere
A stock hyped in chat rooms, DMs, or paid newsletters is likely a pump and dump. The promoters sell into your buying.
Spiking on no news
A huge move with no catalyst you can find is usually manipulation of a small, thin stock. If you cannot find the reason, you are the reason.
Tiny float, wild candles
Very few tradable shares means a handful of players can whip the price violently. Halts and instant reversals are common.
Serial share printers
Companies that constantly issue new shares (dilution) crush every rally. Check if the share count keeps ballooning.
Penny stock promises
Sub dollar stocks with revolutionary claims and no revenue are where fraud concentrates. Cheap per share does not mean cheap.
Trading halts
A stock that keeps getting paused for volatility can gap far past your stop while you cannot act. Your risk plan stops working.
Wide, jumpy spreads
If the gap between bid and ask is a percent or more and flickering, exits will hurt. Illiquidity eats accounts.
It already ran
Arriving after a stock is up huge is buying someone else's exit. Late chasing is the classic beginner donation.
Indicators, and what they can and cannot do
Traders overlay indicators on charts to read momentum and trend. They are useful lenses. They are not crystal balls, and it is dishonest to pretend anyone can reliably predict prices.
The most used one is the moving average, the average price over the last N bars, drawn as a smooth line. A fast average crossing above a slow one hints momentum is turning up; crossing below hints down. Toggle them on the chart and spot the crossovers.
Price with a fast and a slow moving average
Two more you will hear constantly
VWAP
The volume weighted average price of the day. Above it, buyers are in charge of the session; below, sellers. Day traders treat it as the day's dividing line.
RSI
A 0 to 100 momentum score. Above about 70 is called overbought (stretched up), below about 30 oversold (stretched down). A hint of exhaustion, not a signal by itself.
Trade the reaction, not the prediction
Wait for the level to hold or break, then act. Guessing in advance is where accounts die.
Confluence or nothing
A trade needs several things agreeing: catalyst, volume, level, and trend. One lonely signal is a coin flip.
Plan the trade, trade the plan
Entry, stop, and target written down before you click. If price does something else, you do nothing.
Process over outcome
A good trade can lose and a bad trade can win. Judge yourself on following the rules, and the results follow the process.
Where to go deeper
This guide gets you fluent. These few books and free official sources carry you the rest of the way, with nothing to sell you.
The Little Book of Common Sense Investing · John Bogle
The founder of Vanguard on why low cost index funds beat almost everything else. The single best first book.
A Random Walk Down Wall Street · Burton Malkiel
Why markets are hard to beat, and what actually works for regular people, updated for fifty years.
The Intelligent Investor · Benjamin Graham
The 1949 classic on price versus value and temperament. Warren Buffett calls it the best investing book ever written.
The Psychology of Money · Morgan Housel
Short essays on the behavior side: why good decisions matter more than clever ones.
One line glossary
- Asset
- Anything you own that has value: stocks, bonds, cash, property.
- Bear market
- A long decline, usually 20 percent or more.
- Bid / Ask
- The buyer's price and the seller's price.
- Broker
- The app or firm that places your trades.
- Bracket / OCO order
- A stop loss and a take profit placed together; whichever fires first cancels the other.
- Brokerage account
- The regulated account behind a trading app that holds your cash and shares.
- Bull market
- A long rise in prices.
- Buying power
- The settled cash you have available to buy with right now.
- Capital gain
- The profit when you sell for more than you paid.
- Compounding
- When your gains earn gains of their own, snowballing over time.
- Cost basis
- The total you paid for a holding, used to work out profit and tax.
- Day trading
- Opening and closing trades within one day. High skill, high cost, most who try lose money.
- Dividend
- A cash payout to shareholders from company profits.
- Earnings / EPS
- A company’s profit, and that profit divided by its shares. The number markets watch most.
- ETF
- A fund holding many assets that trades like a single stock.
- Fractional share
- A slice of one share, so $10 can buy part of a $500 stock.
- Fundamentals
- The health of the actual business: earnings, revenue, debt, margins.
- Float
- The shares actually available to trade. A tiny float means wild, whippy prices.
- GTC
- Good till canceled. A limit order that stays open until it fills or you cancel.
- Index
- A scoreboard tracking a basket of stocks, like the S&P 500.
- Leverage
- Trading with borrowed money. Amplifies gains and losses.
- Leveraged ETF
- A fund like TQQQ that multiplies an index’s DAILY move (e.g. 3x). Decays in choppy markets; not for holding casually.
- Liquidity
- How easily something can be bought or sold without moving the price.
- Long / Short
- Betting a price will rise / betting it will fall.
- Market cap
- A company's total value: price times shares.
- Market hours
- The window when a stock trades normally, often 9:30am to 4:00pm local time.
- Moat
- A lasting advantage rivals cannot easily copy, protecting a company’s profits.
- Paper trading
- Practicing with fake money and real live prices.
- Payment for order flow
- How many free apps earn: selling your orders to trading firms.
- Moving average
- The average price over the last N bars, drawn as a smooth trend line.
- PDT rule
- US rule: 4+ day trades in 5 days requires $25,000 minimum in a margin account.
- P/E ratio
- Price divided by earnings. A rough gauge of how pricey a stock is.
- Portfolio
- The full collection of everything you own.
- Position sizing
- Choosing how many shares so a stopped-out trade costs only a set % of your account.
- Pump and dump
- Hyping a thin stock to lure buyers, then selling into them. A scam, and common.
- Realized / Unrealized
- A gain is unrealized while you hold, and realized once you sell.
- Settlement (T+1)
- The one business day before cash from a sale is yours to withdraw.
- RSI
- A 0 to 100 momentum score. Extremes hint a move is stretched, not that it must reverse.
- Slippage
- The gap between the price you expected and the price you actually got.
- SIPC
- US protection covering up to $500,000 if a broker fails, not against market losses.
- Spread
- The gap between bid and ask.
- Stop loss
- An order that sells automatically if the price falls to a set level.
- Trailing stop
- A stop that follows price up at a set distance and never moves down.
- Two factor authentication
- A second login step that guards your account.
- Valuation
- Whether a price is fair for what the business earns. P/E is a common gauge.
- Volatility
- How much a price swings up and down.
- Volume
- The number of shares traded in a period.
- VWAP
- The day’s volume weighted average price. The session’s bull/bear dividing line.
- Watchlist
- A saved list of stocks you follow but do not necessarily own.
- Yield
- The dividend as a percentage of the share price.