Is the word "stock market" sounds familiar to you? If it is, still there are some individuals that are not familiar with the terms like "stock","bulls and bears", "buying and selling of stocks", and "stock market charts. For those who don't have financial experience, even the term "stock market" itself stays a point of misunderstanding. For others, the trading on the stock market can contribute to blooming or bankrupt businesses if these companies have played the "stock market game" correctly.
Basically, stocks are representations of the company's assets and profits. If the company creates a profit from the stocks, the value is then divided yearly among the shareholders in the form of a dividend. Take this example, if a company creates a profit of $500,000 this year, and it has 20 shareholders holding 1 stock each, the shareholders would receive a dividend of $25,000.
StockMarket ExplainedStock market/stock exchange - is a financial firm in which licensed brokers trade company stocks and other securities including privately traded securities that are authorized for trading by the exchange. Based on the needs and requirements, brokers buy and sell stocks for the people and/or companies they signify.
Two Types Of Stock Market• Primary Stock Market - for trading of Initial Public Offerings (IPOs) and other brand new issues by sellers and buyers
• Secondary Stock Market - for trading of present stocks in the market by buyers and sellers
Common Stock Market Terms
Stock market "lingo" is nothing to be afraid of or feel confused about. In order to understand the trends in the stock market, you need to learn certain frequently used terms and be able to evaluate stock market charts.
Stock Market Terminology
Stock price - is a worth where stocks are purchased and sold. Position and performance of company implementing the stocks are the factors that instantly impacts on stock prices.
Reading Stock Market Charts - charts and quotes provides the current position of the performance of the stocks. This stock changes can be mirrored as "day-to-day" or "intra-day" based on the trading on that certain day.
Type of Stock - Preferred stocks would have particular symbols written after the name of the company. If no such symbols are specified, the stock is a common stock.
Ticker Symbol - each company trading on the stock market is assigned an abbreviation or certain letters. These ticker symbols are used so that all the companies can be listed on the ticker tape. All the major stock exchanges in the U.S. such as the New York Stock Exchange, NASDAQ, Dow Jones and American Stock Exchange. If new companies will register their own symbols, it should be different from the symbols that are already being used by other firms. Some examples of ticker symbols include AAPL for Apple Computer Inc. and INTC for Intel. You will probably observe that some symbols would have a period followed by 1 or 2 additional letters. One good example is BRK.B. This means that the stock is being offered by Berkshire Hathway Company and it is a lower priced "Class B" stock.
Bulls and bears - "bulls" and "bears" are economic signals for the stock market. You have a bull market when the values of stocks go up. This is a signal of good health in the economy. In a bull market, investors can stand to gain extensive profits from stock sales. Bear market is an indicator of an economic downtrend so that investors need to sell their stocks before the prices drop much lower. Over a bear market, a lot of investors and businesses tend to lose significantly if they have not been quick in buying good stocks and selling those shares before they dropped fast. The general rule of thumb to observe in the stock market is to purchase when prices are low and sell when prices are high just before the prices flunk.
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