An Introduction

These are stocks in big, industry-leading firms. Many traders are attracted to Blue chip stocks because of their reputation for paying stable dividend payments and demonstrating long-term sound fiscal management. Some believe that the expression ‘blue-chip’ derived from the blue chips used in casinos, which are the highest denomination of chips.

A proportion of the earnings of a company that is paid out to its shareholders, the people who own their stock. These dividends are paid out either quarterly (four times per year) or annually (once per year). Not every company pays its shareholders dividends. For example, companies that offer penny stocks likely don’t pay dividends.

This when traders buy and sell within a day. Day trading is a common trading strategy. However, if someone day trades, they may also make long term investments as well (a long-term portfolio). The following two terms only apply to share trading:

This is the at which an exchange closes and trading stops. Regular trading hours for the NASDAQ and the NYSE are from 9 a.m. to 4:30 p.m. Eastern time. After-hours trading continues until 8 p.m.

This is a place where trades are made. Two well-known stock exchanges are the NASDAQ and the New York Stock Exchange (NYSE).

The bid is the price traders are willing to pay per share. It is set against the ask price, which is the price sellers are willing to sell their shares for. What do we call the difference between the bid and the ask price? The spread.

A broker is a person or company that helps facilitate your buying and selling of an instrument through their platform (in the case of an online broker). They usually charge a commission.

A metric indicating the relationship between a stock’s price relative to the whole market’s movement. If a stock has a beta measuring 1.5, this means the when the market moves 1 point, this stock moves 1.5 points, and vice versa.

The opposite of a bear market is a bull market. When the stock market is experiencing a period of rising stock prices, we call it a Bear Market. An individual stock, as well as a sector, can also be called bullish or bearish.

This is a term used to describe the stock market when it is moving in a downwards trend. In other words, when the prices of stocks are falling. If a stock price falls deep and fast, it’s considered very bearish.