40 Stock Market Terms You Need to Learn + [Infographic]

Learning about the stock market — and stock market terms — can be intimidating. There’s so much to wrap your head around.

What’s the easiest way to get started? Simple … Start with learning the basic terms and phrases.

Once you’ve got your head around the jargon, the financial news will make more sense, you’ll be able to speak intelligently about stocks, and you’re off on your journey to trading success.

Work hard at learning these terms. And soon we may see you hunting down trades alongside great mentors in the SteadyTrade Team community…

This post will quickly get you up to speed with 40 of the most common stock market terms every trader needs to know. Let’s dive in!

Table of Contents

What Is the Stock Market and What Are Stock Market Terms?

Before we go too far, let’s make sure you’re clear about what the stock market is.

The stock market is a collection of markets across the globe where traders and investors buy and sell shares of companies. In the U.S., most trading is done on the NYSE and Nasdaq.

Traders and investors buy and sell stocks hoping to make a profit. Some will hold stocks for years. Others will be in and out within seconds.

The stock market has its own culture, and people follow market action the same way sports fans follow their favorite teams.

There are countless books, TV shows, cable networks, and websites that focus solely on the stock market. Start browsing and see which ones you might like.

Why It’s Important to Learn Stock Market Terms

As you start to follow the stock market, you’ll see traders and investors have their own shorthand.

If you want to understand what’s going on and learn to trade, it’s important that you understand what other traders and investors are saying. To do that, you need to know the most common stock market terms.

Is it like learning a new language? Thankfully, no. This post will have you up to speed in no time. Read on!

Learn the 40 Most Common Stock Market Terms for Beginners

Let’s get you quickly up to speed, so you can talk stocks with seasoned professionals by dinnertime.

Below are 40 of the most common stock market terms, with easy-to-understand explanations. Once you learn these terms, the world of trading and investing will become much clearer.

To take a position by buying shares of a company.

As a trader, you generally buy shares when you think a stock’s price will rise.

To sell the shares you currently own.

Traders generally sell shares when they see an opportunity to take profits or they think the stock’s rise is ending.

When a trader in the market makes an offer to buy shares.

Traders will bid for a stock at a certain price.

When a trader offers their shares for sale at a certain price.

If a trader holds shares, and they want to sell them at a particular price, they’ll place an order asking buyers to purchase them.

Bid-Ask Spread

The difference between the highest price at which someone is willing to buy shares and the lowest price someone is willing to sell shares.

Bull Market

A market condition where stock prices are continually rising.

Bull markets are characterized by optimism and excitement from traders and investors.

Bear Market

A bear market is the opposite of a bull market. It’s a market condition where prices are continually falling.

Bear markets are times where the outlook appears bad for a company, an industry, or the overall economy. Traders and investors are less willing to buy stocks, and many are looking to sell their stocks. This causes prices to fall.

Limit Order

A type of stock market order that provides instruction to only execute at a certain price, or one that is more profitable.

For example, a trader could place a limit buy order to purchase 100 shares of a stock at $10.20. The broker will attempt to buy 100 shares at a price of $10.20 or below.

Market Order

A type of stock market order that provides instruction to buy or sell as quickly as possible, at whatever price is currently available.

Market orders can be expensive if there’s not enough volume being traded. If you’re going to trade penny stocks, you should almost never use a market order.

Good Till Canceled Order

A type of stock market order to buy or sell shares that remains open until the trade is made or you cancel the order. Also known as a GTC order.

Day Order

A type of stock market order to buy or sell shares in which if the order isn’t filled during the day, it’s automatically canceled at the market close.

Volatility

The statistical measure of how much a stock moves up or down.

Stocks that move up and down wildly are known as volatile stocks. They can provide great profit opportunities, but also come with greater risk.

Liquidity

The measure of a stock’s ability to be bought and sold quickly. More shares being bought and sold means more liquidity.

If there are lots of buyers and sellers trading lots of shares of a stock, you’ll generally find it easier to enter and exit a position.

Trading Volume

The number of shares being traded at a point in time.

More trading volume means a stock is more active, and it’s easier to enter and exit positions.

Going Long

By going long, you’re purchasing shares of a stock and you’re looking to profit if the stock price rises.

Going Short

When a trader looks to profit from a stock’s price going down.

A trader goes short by borrowing shares from a broker, selling them, and hoping to buy them back and return them to the broker after the price has dropped.

Averaging Down

This is where an investor or trader buys more shares of a stock as the price drops, lowering the average price paid for the position.

Averaging down can be an intelligent strategy for long-term investors, but we don’t recommend that active traders do it.

Market Capitalization

Market capitalization, also known as market cap, is the total value of all a company’s shares.

For example, if a company has one million shares outstanding and the stock price is $10 per share, the market cap will be $10 million.

Public Float

This is the term for a company’s freely traded shares. Many companies will have large chunks of shares that aren’t tradeable because they’re held by company management or key investors.

As active traders, we generally look for companies with a small public float, as their prices tend to be more volatile.

Outstanding Shares

This is the total number of a company’s shares. It includes both the public float and restricted shares held by management or key investors.

IPO stands for initial public offering. It’s when a company goes through the process of selling shares on the stock market for the first time.

Secondary Offering

A company may raise money from investors by offering shares, even after the company’s shares are traded on a stock exchange. This is called a secondary offering.

Blue-Chip Stock

These are large, stable, well-known companies that are often profitable and pay consistent dividends.

Forex

Forex is short for foreign exchange. The term refers to the global trading of currencies in a way similar to the way stocks are traded.

Hedge Funds

A hedge fund is a type of investment fund that often uses non-standard investment and trading techniques.

Hedge funds generally try to be profitable regardless of whether the market is up or down, and they’re generally reserved for high net worth investors.

Mutual Funds

Mutual funds are pools of investor money put together to invest in stocks, bonds, and other financial assets.

ETF is short for exchange-traded fund. ETFs are similar to mutual funds in that they’re pools of capital being used for investment purposes. But instead of wiring your money into the fund, you can simply purchase shares of the ETF on a stock exchange.

ADR is short for American Depositary Receipt. These are certificates that represent shares of overseas stocks.

ADRs allow you to buy and sell overseas stocks on U.S. stock exchanges in much the same way you can trade American stocks.

The statistical measure of the way a stock performs compared with the broader market. Investors use beta as a way of understanding how much risk there is in holding a stock.

Stockbroker

A person or company that acts as an agent, allowing traders and investors to buy and sell stocks. Need help picking a broker? Find out more here.

Day Trading

The practice of entering and exiting stock trades within a single day.

For example, if you purchase a stock in the morning, then sell it for a profit in the afternoon, you’ve day traded.

Dividend

This is when a company pays a portion of its earnings to its shareholders. Long-term investors and retirees generally focus on dividends.

Stock Charts

The visual graph of the price of a stock over time. Traders use stock charts as a way to help them interpret what the stock price is doing and what’s likely to happen next.

Stock Exchange

A stock exchange is an entity where stocks are bought and sold. The most well-known stock exchanges are the New York Stock Exchange (NYSE) and the Nasdaq.

Execution

Execution is the act of fulfilling a stock trading order.

For example, you place an order with your broker to buy 100 shares of XYZ at $10. When that trade has been completed, you can refer to that order as having been executed.

Margin

Margin refers to the use of borrowed money to trade shares. Some brokers allow margin trading, but we don’t recommend it, especially if you’re new to the markets.

For example, you might have $10,000 in your trading account, but use a margin account to purchase $20,000 of stock. With margin, you can make money and lose money faster. Be careful!

Moving Average

A commonly used technical indicator found on stock charts. The moving average is an average of the stock price over a certain time period.

For example, the 20-day moving average is calculated by taking the price of the stock on each of the prior 20 days, then finding the average of those 20 prices.

It’s a quick and simple way for traders to see the trend direction of a stock.

Stock Portfolio

A stock portfolio is an investor’s collection of stocks.

Trading Mentor

An experienced trader who can shorten your learning curve by teaching you how they trade and what they’ve found to work in the markets.

I’m a huge fan of mentorship, and I teach a bunch of students everything I know about the markets in the SteadyTrade Team community. If you want to get serious about trading, come join us!

Price Quote

A price quote is a stock’s price at a certain point in time. Traders will often want up-to-date price quotes to better analyze stocks and find decent trading set-ups.

Price Rally

A price rally is when a stock price rises at a noticeably quicker pace.

Sector

The stock market is made up of shares of companies in different industries and niches. We refer to them as sectors.

Stock Symbol

A unique collection of letters and/or numbers that represent a stock. Amazon, for example, trades on the Nasdaq under the symbol AMZN.

Dividend Yield

This refers to the size of a company’s dividend compared with the price of its stock.

For example, if a stock price is $20 and the company pays a dividend of $1 per share, the dividend yield would be 5%.

Stock Market Slang: How to Learn Fast

They say the best way to learn a new language is through total immersion. That means that if you want to learn German, you should go live in Germany and speak German every day.

Applying that idea to stock market slang, I’d say the quickest way to learn is by reading everything you can and following people who speak market on social media. Check out my live Instagram sessions. Just be careful who you follow.

When you find a term you don’t understand, come back to this post or search for the definition. In no time, you’ll be up to speed.

Do I Need to Know These 40 Stock Market Terms to Start Trading Stocks?

It’s pretty simple to trade a stock. So in reality, you don’t need to know all of the above terms, but you should still make an effort to learn them…

That’s because successful trading is a marathon, not a sprint. Sure, you could trade a stock right now, and maybe make a profit. But you should focus on building your knowledge base and your trading skills.

By learning stock market terms, you’ll have the basic building blocks to help you climb the ladder of success step by step, tackling new trading concepts and techniques along the way.

After Learning the Most Common Stock Market Terms, What’s Next?

So once you know how to discuss stocks and feel comfortable reading the Wall Street Journal and following other market news…

Next, you should look to set yourself up with an intelligent trading strategy and the best tools to help you succeed.

You can develop a trading strategy by reading through this blog or watching the StocksToTrade YouTube channel. There are a ton of free resources to help you, no matter whether you’re a beginner or a seasoned pro.

It’s also important to find the right toolset to find, analyze, and make the best trades for your strategy.

To compete in today’s markets, you want access to detailed stock charts. You need scanners to find opportunities, news feeds to keep on top of the latest happenings in the market, and much more…

How do top traders manage all this? Many use our StocksToTrade trading platform, where you’ll have access to just about everything you’ll need in one place. Want to see how streamlined trading can be? Grab a 14-day trial of StocksToTrade for just $7!

Conclusion

Learning about the stock market is pretty simple if you follow the right steps and learn the fundamentals first.

Once you’re up to speed with 40 of the most common stock market terms, reading about the stock market will no longer have you scratching your head.

You’ll be able to search for information to develop a trading strategy and then test trading concepts using a trading platform.

Don’t have a trading platform yet? Get a trial of StocksToTrade for just $7!

Are you comfortable discussing stocks? Which terms or concepts do you have trouble getting your head around? Tell me below!

For those that would rather look at our epic infographic, the 40 Trading Terms are also listed below!

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Keep this list handy when screening for potential trades on StocksToTrade. With this handy guide, market terms will start making way more sense!

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Learning about the stock market — and stock market terms — can be intimidating. There’s so much to wrap your head.

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As a trader, it’s important that you know as much about the stock market as possible. That includes understanding the.

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Comments

Love this visual!

I love the cartoons and the definitions are very simple to understand

Thanks so much for everything you do to help me become a better trader !

This is very good. I will save it for reference when I don’t remember what is what. Thanks good info.

thanks for the information

Great beginner terms! Thanks

Gotta wonder why it’s said to not buy or sell by market, must use ‘sell’ or ‘buy’ by ‘limit’, and don’t fully understand what to set a limit at.
What’s wrong with using ‘market’??

Thanks for all you do..

This was helpful. Can you provide more info on public float?

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