Don’t forget to check out a research platform like Zacks so you can compare stocks on your own. Zacks Rank uses a proprietary ranking system to evaluate stocks on a scale from 1 to 5; their #1 Strong Buy stocks have beaten the market in 26 of the 31 years they have been used.
Now you should be a bit more familiar with how the stock market works, what drives prices, and general trends to look out for. The next chapter is all about choosing your first stock and making your first trade!
Supply – The total quantity of a good, service, or security available for purchase at a given price.
Demand – The total quantity of a good, service, or security the market is willing to purchase at a given price.
Bid Price – The highest amount a buyer would be willing to pay for a share of a security.
Ask Price – The lowest amount a seller would be willing to take for a share of a security.
Market Equilibrium – A level of price and quantity where supply and demand are equal.
Stock Exchange – a marketplace where buyers and sellers of stocks come together to make trades.
Over The Counter – To trade stocks that are not listed on a country’s primary stock exchanges.
Order Book – the public record listing all “bid” and “ask” offers on an exchange, along with a record of transactions that have taken place.
Wall Street – a street in downtown New York that houses the New York Stock Exchange.
New York Stock Exchange (NYSE) – the largest stock exchange in the world, located in New York City.
NASDAQ – an “electronic exchange”, and the second largest stock exchange in the United States.
Chicago Mercantile Exchange (CME) – the world’s largest exchange for futures and commodity contracts
Chicago Board Options Exchange (CBOE) – the primary exchange for options trading in the United States
Initial Public Offering (IPO) – The first time a company’s stock is issued for sale to public investors.
Business Cycles – The trend where the economy tends to have “boom” and “bust” cycles every few years.
Bull Market – A time of general investor confidence where stock prices as a whole tend to increase.
Bear Market – A time of general investor uncertainty or fear where stock prices as a whole tend to decrease.
Market Timing – The act of an investor trying to “buy low” when a stock’s price is low, and “sell high” when it is at its peak.
Brokerage – a person or organization that acts as a custodian and intermediary to connect an individual investor to stock exchanges in order to make investments and execute trades.
Discount Brokerage – a low-cost stock broker that typically offers minimal services for self-directed investors.
Full-Service Brokerage – a high-cost stock broker that typically also offers significant investing advice, tax help, and other expert services to help investors.
S&P 500 – A large collection of US stocks from some of the largest companies, frequently used as a measure of the stock market as a whole.