30 Essential Stock Market Terms

Hello Stoic Investors,

Today I want to talk about investing.

Equity markets are huge.

According to SIMFA, the U.S. equity markets are the largest in the world and continue to be among the

deepest, most liquid and most efficient.

They represent 41.1% of the $107 trillion global equity market cap in 2023, or $44 trillion.

I’m convinced that everyone can get a piece of that pie.

But in order to that, you need to learn a few things.

Investing in the stock market without understanding the basics is like playing a game of chess without

knowing how the pieces move.

So here are 30 essential terms every investor needs to know.

The ABCs of the stock market

1. Stock: Ownership share in a company.
 

2. Dividend: A portion of a company's profits distributed to shareholders.
 

3. IPO (Initial Public Offering): The first sale of a company's stock to the public.
 

4. Market Capitalization: The total value of a company's outstanding shares.
 

5. Bull Market: A market characterized by rising stock prices and positive investor sentiment.
 

6. Bear Market: A market characterized by falling stock prices and negative investor sentiment.
 

7. Index: A benchmark that measures the performance of a group of stocks.
 

8. Volatility: The degree of variation or fluctuation in stock prices.
 

9. P/E Ratio (Price-to-Earnings Ratio): A valuation metric that compares a company's stock price to its earnings per share.
 

10. Blue-Chip Stocks: Stocks of large, well-established, and financially stable companies.
 

11. Portfolio: A collection of investments held by an individual or institution.
 

12. Diversification: Spreading investments across different assets to reduce risk.
 

13. Market Order: A type of order to buy or sell a security at the current market price.
 

14. Limit Order: A type of order to buy or sell a security at a specific price or better.
 

15. Volume: The number of shares traded in a particular stock or market.
 

16. Bid: The highest price a buyer is willing to pay for a stock.
 

17. Ask: The lowest price a seller is willing to accept for a stock.
 

18. Bullish: Positive or optimistic outlook on the market or a particular stock.
 

19. Bearish: Negative or pessimistic outlook on the market or a particular stock.
 

20. ETF (Exchange-Traded Fund): A type of investment fund that trades on an exchange like a stock.
 

21. Volatility Index (VIX): A measure of market volatility and investor sentiment often referred to as the "fear index."
 

22. Margin: Borrowed money used to purchase stocks or other investments.
 

23. Short Selling: Selling borrowed stocks in the hopes of buying them back at a lower price in the future.
 

24. Market Maker: A brokerage firm or institution that provides liquidity by buying and selling securities, maintaining a market for the security.
 

25. Resistance Level: A price level at which a stock has historically struggled to rise above.
 

26. Support Level: A price level at which a stock has historically struggled to fall below.
 

27. Dividend Yield: The annual dividend payment of a stock divided by its current market price.
 

28. Penny Stock: Low-priced, speculative stocks that trade at a relatively low market capitalization.
 

29. Day Trading: Buying and selling stocks within the same trading day to profit from short-term price fluctuations.
 

30. Stop Loss Order: A pre-defined order to sell a stock if it reaches a specific price, limiting potential losses.

Congratulations! You’ve made it to the end.

Truth be told, most simply skip things that require their full attention.

But you are different.

And that’s the first stepping stone to financial freedom.

So, note down these points and start investing today:

1. Skipping the basics is a recipe for investment disaster.
2. These terms empower you to claim your piece of the $44 trillion stock market pie.