stock market language

Shareholder

Partial owner of the company (stock holder)

Market cap

Total value if you were to collect all of the shares of a company.

Investors

People who like to buy stocks and hold them for many years

Traders

Ppl who buy stocks more quickly, and only hold them temporarily (in order to sell)

Stock exchange

A place where buyers and sellers show up and exchange their shares for money or their money for shares

NYSE

New York stock exchange

Known for blue chip stocks

Blue chip stocks

High quality stocks (think Coca Cola and McDonalds)

Nasdaq

stock exchange best known for its tech stocks (think apple and Netflix)

Broker/brokerage

A “middleman” who gives people access to a stock exchange

Market order

Tells the broker to get you into the stock as quickly as possible, regardless of price

Basically tells your broker you want to buy your shares from the ask

You sell to the __ and you buy from the __

Bid, ask

Liquid stock

A stock where you can buy or sell a lot of shares without moving the stock too much

Is it safe or risky to place a market order to buy a liquid stock?

Typically safer because the bid ask spread could just be a penny or two

Is it safer or risky if you use a market order on an illiquid stock?

Very risky

Should you stay away from illiquid Stocks or go for them?

Best to stay away unless you want to put it on a limit order, there is no guarantee it will be filled though.

Limit order

A limit order specifies a price you want to pay for a stock.

If you want to buy a stock for $120.25 your order will only be filled if there is a seller that is willing to part with the shares at that price.

Which is typically better to use? A market order or a limit order?

A limit order, much more controlled

A day order

The order will only be executed during regular market hours today. If the order has not been filled by the time the stock market closes for the day, It will automatically be canceled by the broker.

GTC (good til cancelled) order

means the order will be good for today’s market hours as well as the following days and weeks. If you don’t cancel it, it will still be working..

Normal trading hours for US stock exchanges

9:30am- 4:00pm

EST time (Ohio is in that catagory)

Pre market trading session

4am-9:30am

Some brokers will let you trade stocks during this time

Post market trading session (aka after hours trading)

4pm- 8pm

Some brokers will let you trade stocks during this time

If you are going to trade before the market opens or in the after hours, market always use this order

Limit order

ETF (exchange traded fund)

Treats just like a stock, you can buy it or sell it, each ETF represents a certain index. (There are ETFs for the S&P, the DJIA, ect.)

S&P 500

500 US stocks with the largest market caps all altogether in a big basket.

What is the stock index?

A stock index is a group of stocks used to show how part of the stock market is doing overall.

Ex: S&P 500, DJIA, basically all of those stocks you can buy that are investments in a bunch of companies

DIJA ( the Dow Jones industrial average)

An index that contains only 30 companies

Indexing

A form of passive investing that consists of buying an index and holding it for the long run

Passive investing

Refers to any strategy that does not involve a lot of thinking or a lot of buying or selling

Bear market

if stock prices have been falling for six months or more, there is a lot of pessimism in the air, it might be a good time to invest some extra money.

Dividend

A dividend stock will usually make a cash payment into your brokerage account every three months. That cash payment is the dividend

NOBL

Huge basket of dividend stocks

P/E

Price to earnings ratio

Stock trade price/ earnings per share

$100/ 6.50 =$15.38

What is considered a good E/P

15 and above

P/E that means not good

Anything below 10 is a no go

what if a growth stock is trading below its 200 day moving average or its 50 day moving average is trading below the 200 day moving average

The stock is a downtrend, don’t buy

Float

The number of shares of a stock that are actually available for trading

#of shares- closely held