Think I’m so dumb I gotta laugh. When I see your face seeing mine seeing graphs u grappling. W the. Pie charts don’t u know what u are..::: besides stupiful to Vee
38 Must-Know Stock Trading Terms for Beginners
Home»Penny Stock Basics»38 Must-Know Stock Trading Terms for Beginners
By Timothy SykesLast updated on January 27, 2023
Must-Know Stock Market Terms: Key Takeaways
- Learn these must-know stock market terms before you make a single trade…
- This is the beginning of your new vocabulary — study up!
- What is leverage and why should you avoid it? Read this now!
What’s the best place to start for new traders? Learn the trading lingo! If you want to learn how to trade, you need to know what the terms mean so you can follow along.
What does it mean when traders talk about the bid, ask, and spread? And what about brokers and leverage? Get all the answers below…
What Is the Stock Market?
© Millionaire Media, LLC
The stock market is where people buy and sell shares of publicly traded companies. The term refers to all the major exchanges as a whole.
What Are Stock Trading Terms?
Stock trading terms are the lingo used by day traders.
Before you study any of my YouTube videos, blog posts, or watchlists — learn these stock market terms. You must know the basics before you can move on to patterns, strategies, and executing trades. (I’ll tell you what that means later.)
The more you know, the better prepared you can be to tackle the markets. Bookmark this page and return to it often as a handy reference.
I’ve made over $7 million in profits trading penny stocks. Learn more with my FREE penny stock trading guide.
38 Key Basic Stock Market Terms
Let’s look at some of the most important stock market terms you must know to trade stocks.
1. Annual Report
Annual reports inform shareholders about the company. It includes information like the company’s cash flow and management strategy. When you read an annual report, you’re judging the company’s solvency and financial situation.
2. Arbitrage
Arbitrage refers to buying and selling the same security on different exchanges and at different price points. If a stock trades at $10 on one exchange and $10.50 on another, you could buy shares for $10 and sell them for $10.50 on the other market. You’d pocket the difference as profits.
3. Averaging Down
Averaging down means adding to a losing position at a lower price. It increases your position size and lowers your average purchase price.
I call it adding to a loser and I don’t recommend it. If a stock goes against you, cut losses quickly!
4. Bear Market
A bear market refers to a market environment where a major index or stock falls 20% or more from its recent highs. It’s the opposite of a bull market. More on that term in a bit.
5. Beta
Beta is a measurement of a stock’s volatility compared to the overall markets.
The markets have a beta of 1. If a stock has a beta of 1.5, it means that for every 1-point move in the market, the stock moves 1.5 points. That means the stock’s more volatile than the market.
6. Blue-Chip Stocks
Blue-chip stocks are the stocks of large, industry-leading companies. The expression came from blue gambling chips, the highest-valued chips in casinos.
7. Bourse
This stock market term is a little murky. Technically, it’s another name for the stock market. It originates from a house where wealthy men gathered to trade shares. But in today’s terms, it usually refers to the Paris stock exchange or a non-U.S. stock exchange.
8. Bull Market
© Millionaire Media, LLC
A bull market is the opposite of a bear market. It refers to a market in a prolonged period of increasing stock prices at least 20% above a recent low.
A single stock can be bullish or bearish too. So can a sector.
9. Broker
A firm or person who executes your buy and sell orders for stocks or other securities. A broker is a must for every trader. Learn how to choose your best broker here.
10. Bid
The amount of money a trader’s willing to pay per share for a stock. It’s balanced against the ask, which is what a seller wants per share of that same stock.
11. Close
The time the market closes. The major exchanges close at 4 p.m. Eastern, with after-hours trading continuing until 8 p.m.
12. Day Trading
Day trading is the practice of buying and selling a stock or security within the same trading day. This is my go-to trading strategy. Learn my patterns and strategies in this program.
13. Dividend
A dividend is a portion of a company’s earnings paid to shareholders quarterly or annually. Not all companies pay dividends. They’re especially rare for penny stock companies since they rarely have profits.
14. Exchange
A place where investors and traders buy and sell stocks. The most well-known exchanges in the U.S. are the New York Stock Exchange (NYSE) and Nasdaq. I prefer to trade stocks that trade on the OTC markets.
15. Execution
© Millionaire Media, LLC
When your buy or sell order completes, it’s called execution. If you put in an order to sell 100 shares, your order executes when all 100 shares are sold.
16. Haircut
A haircut can have two meanings. It can refer to a thin spread between the market maker’s bid and ask. It can also refer to the difference between a stock’s value and the amount a bank will recognize as collateral for a loan.
17. High
A high refers to a stock or index reaching a greater price point. A high can refer to a daily, weekly, or monthly high. Stocks near 52-week highs or all-time highs can be a bullish signal for traders.
18. Index
An index is a benchmark used as a reference marker for traders and investors. The Dow Jones Industrial Average (the Dow) and S&P 500 are examples of indexes.
19. Initial Public Offering (IPO)
An IPO is the first sale or offering of a stock by a company to the public. The Securities Exchange Commission (SEC) has strict rules for companies issuing an IPO.
20. Leverage
When you use leverage, you borrow capital from your broker with the goal of increasing profits. It’s one way to potentially increase gains — but it also increases losses. Don’t trade with leverage.
21. Low
Low is the opposite of high. It represents a lower price point for a stock or index.
22. Margin
A margin account lets a trader borrow money from a broker to purchase a stock or asset. Margin is the difference between the loan amount and the securities price.
Margin trading is risky. If the trade goes south, you can lose significant cash. Read up on margin trading here.
23. Moving Average
© Millionaire Media, LLC
A moving average is an indicator that shows a stock’s average price per share during a specific period. The 50- and 200-day moving averages are commonly used time frames.
24. Open
The start of the trading day. In the U.S., the stock market opens at 9:30 a.m. Eastern. Premarket trading begins at 4:30 a.m. Eastern. Note that there’s less volume in premarket and after-hours sessions.
25. Order
A trader’s bid to buy or sell a certain amount of stock. Brush up on order types here.
26. OTC Stocks
OTC stocks trade over-the-counter. They’re traded electronically but transactions are less transparent than the major exchanges. Companies listed on the OTC markets are small companies that don’t meet the major exchanges’ listing requirements. They can also be foreign companies.
27. Pink Sheet Stocks
Pink sheet stocks are the lowest tier of OTC stocks. They’re the sketchiest companies and they typically trade under $5 per share.
28. Portfolio
A collection of assets that makes up a trader or investor’s portfolio. You can have as few as one stock in a portfolio or an infinite amount of stocks or other securities.
29. Quote
A quote is a stock’s latest trading price. Stock quotes on free websites are usually delayed information. You may have to pay extra for real-time data.
30. Rally
A rally is a rapid increase in the general price level of the market or of the price of a stock. Depending on the overall environment, it can either be a bull rally or a bear rally. In a bear market, upward trends of as little as 10% can qualify as a rally.
31. Sector
A group of stocks in the same industry belong to the same sector. An example is the tech sector, which includes companies like Apple and Microsoft. Some traders prefer to trade in a specific sector, especially when sector momentum is hot.
32. Share Market
Any market where traders can buy or sell a company’s shares. The stock market is an example of a share market.
33. Short Selling
Short selling a stock is the opposite of going long. It’s a lot to cover in this post — read more about short selling here. In short (sorry, couldn’t resist), you take a trade where you believe the stock’s price will drop. I used to short sell. These days it’s an overcrowded and risky strategy. But that could change if the market crashes.
34. Spread
The spread is the difference between a stock’s bid and ask price. Say a trader’s willing to sell a stock for $10 and a buyer is willing to pay $9 for it. The spread is $1.
35. Stock Symbol
A stock symbol is an alphabetic symbol of one to four characters. It represents a publicly-traded company on a stock exchange. Example: Apple Inc.’s stock symbol is AAPL.
36. Volatility
The price movements of a stock or the stock market as a whole. Highly volatile stocks make extreme movements and make wide intraday price swings.
See why I love trading high-volatility stocks here. And learn my #1 rule for staying safe here.
37. Volume
The number of shares of stock traded during a period. It’s usually measured in average daily trading volume.
38. Yield
Often refers to the measure of the return on an investment, such as a dividend payment. It’s determined by dividing the annual dividend amount by the price paid for the stock.
Frequently Asked Questions About Market Terms
What Is the Stock Market?
The stock market is an exchange that allows companies to issue shares for the public to buy and sell.
What Are Stock Market Trading Terms?
Stock market trading terms are specific jargon for the securities industry. When experts and amateurs talk about trading, they use stock market terms.
What Are the Most Used Stock Market Terms?
The most used stock market terms include bear market, bull market, blue-chip stocks, and earnings per share. Dividend, bid, ask, spread, and close are more must-know terms.
Stock Market Terms: The Bottom Line
Study this list of stock market terms and become familiar with them. Knowing them can greatly increase your learning curve. And education is the key to trading success.
Are you dedicated and ready to learn how to trade penny stocks? I teach students everything I’ve learned from 20+ years of trading experience in my Trading Challenge.
In 2021, a record number of my students hit huge milestones, and I’m always on the hunt for more success stories. If you want to be next…
Take the Trading Challenge today!
Did you learn a new stock market term? Let me know in a comment — I love to hear from you!
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About
Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More
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Comments (71)
January 27th, 2023 at 11:21 amTimothy Sykes
Hey Everyone,
As many of you already know I grew up in a middle class family and didn’t have many luxuries. But through trading I was able to change my circumstances –not just for me — but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!
Which is why I’ve launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.
So when you get a chance make sure you check it out.
PS: Don’t forget to check out my 30 Day Bootcamp, it will teach you everything you need to know about trading.
March 9th, 2022 at 6:03 amHerbert Abraham
On this specific page on your website is the Stock market terms & words. But could Iask where’s the rest. Like Ask, split, break-out, stock-float, pump & dump, patterns, spike,. ECT. There (SOOO) Many more. Jw would those be around to learn in a page like this one or?REPLY
March 22nd, 2022 at 5:56 amTimothy Sykes
Seriously? There’s literally a SEARCH FUNCTION on the blog page. Blue header bar, right-hand side, looks like a magnifying glass. There are blog posts on ALL those terms.REPLY
October 27th, 2021 at 8:26 amSuraj
thank you so much, sir, I also want to trade but don’t know how to start, here I learned a lot.REPLY
August 21st, 2021 at 9:07 amHenry Murray
Learning facilitates growth.REPLY
June 14th, 2021 at 11:53 amSatvinder
Hi Tim You mentioned for #20 leverage that it is a dangerous game. Could you explain? how so? Profits do not seem dangerous unless there is a piece I am missing and I am not seeing. Could you tell me about that piece is?REPLY
June 28th, 2021 at 11:28 amTimothy Sykes
Yes, using leverage you can make bigger profits, but you can also take bigger losses. Never forget, 90% of traders lose. It’s much better to build a small account over time, focusing on the PROCESS. Unless you want to blow up your account. Ignore me at your own risk.REPLY
May 21st, 2021 at 8:12 amLori
Great article, love the no BS response to spelling!!! It’s all about learning, understanding and making money!REPLY
April 15th, 2021 at 12:54 amGaryLeo
Amazing! Meet your first millionaire student who signed up for your Birthday boot camp beginner challenge! Congrats on your recent success on your solar rotation! Eager to shake the hand of my mentor .. hats off to ya, good sir!REPLY
April 8th, 2021 at 10:15 amJames H Hembree
I need to brush up on the terminology . I’ve been looking at your emails ( which are very helpful ). I’m wanting to start up very soon.REPLY
March 21st, 2021 at 8:45 amMinni
Which resources would you prefer for a begginner to start tradingREPLY
March 30th, 2021 at 1:59 pmTimothy Sykes
Study, study, study. Study more. Start with the https://tim.ly/30boot 30-Day Bootcamp.REPLY
February 12th, 2021 at 12:03 amJerry Williamson
Thank you for enlightening us about the trading terms. I really appreciate your research. Hope to read more articles on your blog…!!! Keep it up.REPLY
February 15th, 2021 at 10:24 amTimothy Sykes
Thank you! Keep studying.REPLY
January 9th, 2021 at 4:54 pmShubham
I like your Millionaire challenge and want to enroll in it but it needs money which I don’t have. I can’t even earn it by doing some as its not my age. Is there some way through which I can get that course for free. By the way I’m turned 13 last yearREPLY
June 28th, 2021 at 12:00 pmTimothy Sykes
Wow! Keep studying. There’s a lot of free content on YouTube and here on the blog, but you’ll need parental approval to start trading. Just keep studying – the market will still be there when you’re ready.REPLY
December 13th, 2020 at 2:25 pmMatthew46
Thank you for the review of stock terms.REPLY
November 11th, 2020 at 5:06 pmJason
Great article it helped me alot to know the defenitions thank you!REPLY
September 13th, 2020 at 5:22 pmBrenton Warren
I finished work at 23:30 tonight, got home showered and in bed reading the 37 trading terms, very interesting. I’m trying to learn as much as I can whenever I get the chance, it late and I’m getting up early in the morning however, I understand if you really want something badly you have to put in the hours grinding because nothing comes easy.REPLY
July 28th, 2020 at 6:26 pmJohnathan Spence
Just ordered your Penny Stock Letter promo with the book today. I had started Trading on Stash about 2 months ago. Wished I would of started out here instead. Really learned a lot from your “5 Things you need to know before your first trade” videos. I can already see what mistakes I’ve made and now I’m going back and fixing them. So Thanks.REPLY
August 5th, 2020 at 6:04 amTimothy Sykes
GOOD!REPLY
July 25th, 2020 at 12:08 amFilippo Iannella Jr
Hey Tim, I see you often respond to comments, A+ for that! I didn’t have a question, more of a request for an opportunity. I have a good resume for 20 and would appreciate a boost in my career, if you could just pass my information along to someone looking for an intern or assistant. Thanks!REPLY
June 14th, 2020 at 6:46 amKay
Hey Sykes. I’m from Kenya, detrmined to learn trading. Asking why I cannot get into your watchlist i.e Invalid Country.REPLY
June 20th, 2020 at 12:55 pmTimothy Sykes
Not sure to be honest. I’ll look into it.REPLY
June 11th, 2020 at 7:23 pmKaren Marchman
I will be developing a glossary of definitions of these terms so I can remember what each thing is and how it works.REPLY
May 15th, 2020 at 4:38 pmKim
Thank you for your useful material and time Tim; May I know what is the cost of participating in your classes? Thank youREPLY
May 16th, 2020 at 8:48 amTimothy Sykes
See https://timothysykes.com/plans there are several optionsREPLY
May 9th, 2020 at 1:15 pmIvanG
Timothy, If you make $$$ millions buying stocks and day-trading, why make $$$ thousands by teaching? Marketing “I’m good person and trying to help people” no longer credible statement.REPLY
July 11th, 2020 at 6:17 amTimothy Sykes
Don’t be ridiculous. Yes, teaching is my passion and my business. I could make more trading but I’d have to live a very lonely life sitting behind my laptop screen. Which is why I start each year with a small account and donate 100% to charity. My priority is teaching! Mind boggling that ignorant haters don’t get this even though I say it over and over again. It’s like I’m taking crazy pills.REPLY
May 3rd, 2020 at 6:17 amKimberly Joy
Hi, I’ve been looking for a book similar to “Stock” for dummies. I am single mom and classroom teacher. Honestly, not many people in my circle or family members I cannot go to for guidance. I’ve been reading your posts and studying terms the last few days. I really want to get into penny stocks. For me I believe the day to day studying will actually help me grasp a better understanding. Do you have any recommendations for literature? I am considering your Super Challenge but definitely need some guidance and yes willing to put in the time to learn. I hear so much about investing seems like a trend (Bitcoin, Stash, Robinhood) but I’m not about a trend or want advice from people who are not students and actually have been successful.REPLY
May 9th, 2020 at 5:47 amTimothy Sykes
Read “The Complete Penny Stock Course” by my student Jamil. It’s a great place to start.REPLY
April 28th, 2020 at 7:11 pmTanaji Patil
Thanks sir, This is most usefull for me . Please send me any other balance terms in the market.REPLY
April 24th, 2020 at 10:24 amLauren
I will be dedicatedREPLY
April 28th, 2020 at 3:28 amTimothy Sykes
GOOD!REPLY
April 19th, 2020 at 11:35 pmKell
I am a fan and just did my first trade..meant to do as a day trade but ended up being a swing..I held TRNX over night and made $500..so excited and am anxious for tomorrow to hopefully make some money on DECN..your future successful student..KellREPLY
April 28th, 2020 at 3:52 amTimothy Sykes
NICE!REPLY
April 4th, 2020 at 9:26 pmAllen
I’m a new trader and I know I did the most stupid thing ever Tim when I just bought 1 Amazon call option at 210 strike a couple of days ago and I was thinking into earnings but the volatility is way already to high in getting out of that on Monday with a over $1,000 loss and least though right and yes that is one of my first trades ever pretty much and to all of you out there can call me and idiot but I had no idea? On what I was doing? until now just scrolling through Tim’s content on all these pages and Wow that volume video is Golden Tim I’m taking notes I really didn’t know what I was doing cause yea I Didn’t Have A Game Plan but now because of you Tim I do Now on it now I just have to go back and watch it Again once again great videoREPLY
April 8th, 2020 at 1:16 amTimothy Sykes
Keep studying and don’t trade without a plan! Read The Complete Penny Stock Course.REPLY
April 2nd, 2020 at 12:55 pmcarlos
Hey iam just starting and now working on the terms, but lil confused in the difference between, sale short and leverage. Thanks for ur help.REPLY
April 8th, 2020 at 1:36 amTimothy Sykes
Thanks for the question. Read this post about short selling and this post about leverage.REPLY
March 30th, 2020 at 11:41 pmDat Guy
Robert cant spell, not typos because be spelt it wrong lots of timesREPLY
April 8th, 2020 at 1:51 amTimothy Sykes
Typos are irrelevant.REPLY
August 31st, 2019 at 2:26 pmGeorge Stankov
SUPER PROFESSIONAL MANREPLY
August 6th, 2019 at 5:37 pmDavid Kallenbach
I have seen you on Wall Street Warriors and was quite impressed. How do I get to learn what you do?REPLY
July 2nd, 2019 at 5:39 pmFlora Jean Weiss
The majority of these terms are making sense and I didn’t have to look up more information about them, hey! Thank you. I’m studying my buns off for freedom, mine!REPLY
June 20th, 2019 at 10:57 amRelf
Hi Can u also tell about, ow an IPO is made, Pre IPO trading and about that stuff?REPLY
May 2nd, 2019 at 8:02 amBob Mattner
I have been studying your video, youtube and e-book materials every day now for 12 days. Getting my “ducks in a row” before I start a serious initiative with your Millionaire Challenge. Great stuff !!! Thanks for caring enough TEACH. I have been “Screwed Over” By a Broker in 1998 to 2000 Bull Market . I was a fool then but have learned my lessons. Enough said. Will join you soon.REPLY
May 12th, 2019 at 6:33 amTimothy Sykes
CooooolREPLY
April 4th, 2019 at 5:22 pmGrace Sause
Hi Hello, My name is Grace and I am from Papua New Guinea. I work as a junior accountant with a financial institution. I have been interested in stock trading since my high school days but I am a bit risk-averse in this exercise. However, I found this website encouraging and will certainly tried it out. Thanks Timothy for all your effort in putting all this togetherREPLY
March 3rd, 2019 at 3:55 pmLouis Rushton
These will come in very handy when I start my new adventure in trading thank you. Is there any other content you offer that could ease my introduction into the industry Tim?REPLY
February 16th, 2019 at 11:28 pmJean-Paul
Thank you!REPLY
February 6th, 2019 at 12:15 pmAna B
I would like to meet in person with someone, to go over all this… I would like to.REPLY
January 19th, 2019 at 2:27 pmMukesh
Hi. I live in India. Do you think the strategies/techniques what you apply on NASDAQ would be applied similarly on Indian Stock exchange such as BSE/NSE?REPLY
December 30th, 2018 at 9:46 pmolddirtbiker
i will be dedicated as I am in this for the long haulREPLY
November 26th, 2017 at 10:28 pmStock News
It is not that hard to figure out what SFOR is doing or working on, strategy and ground work was laid out and Kay is executing the plan as planned which is reflected in past few events likeREPLY
November 26th, 2017 at 11:50 pmTimothy Sykes
YupREPLY
January 19th, 2019 at 2:29 pmMukesh
Hi Tim, great fan. I live in India. Would your strategies/techniques be applied on Indian Stock exchange such as BSE/NSE as well.REPLY
April 25th, 2017 at 11:22 amBob
Proofread!REPLY
April 25th, 2017 at 4:30 pmTimothy Sykes
No timeREPLY
February 7th, 2017 at 6:12 amPenny Stocks
These list are great for quick references for beginners. Investopedia is good as well but Tim Sykes keeps it simple and easier to understand and actually gives you guidance on how to make moneyREPLY
January 6th, 2017 at 5:11 pmAnonymous
If Robert from the above reply can make money doing this, anyone can. That guy can’t even spell. And he thinks a “share” is a “sheer”REPLY
January 7th, 2017 at 4:19 pmTimothy Sykes
Typos are irrelevantREPLY
December 12th, 2016 at 1:17 pmAnshit
http://www.investopedia.com is a better website than thisREPLY
December 12th, 2016 at 1:21 pmTimothy Sykes
LOL its great for the basics, but the basics dont create millionaires…i do :)REPLY
March 3rd, 2019 at 10:30 amAnmol singh ( Indian )
A epic reply😂😂This happens when a pro answers a noobREPLY
November 17th, 2016 at 5:45 pmRobert
I must say Everyone said don’t buy Facebook stock wen it was 20 per sheer an I’m proud that I did a great stock like my Google baby class A people. LIke I figured out if you own 2000 sheers of Fb stock an wen it hits 500$ per sheer U just grew a million dollors wow ! For real not fake dew the math an treat stocks like a bond don’t sell until it touches 500 per sheer. Simple math take 500 x 2000 what’s it come out too yes it dose one million dollors but alw weather the storm an waight an stick too your selling target price 500 an be thankfully.REPLY
November 17th, 2016 at 5:37 pmRobert
Thank u I love the market an I’m Yes alw learning after so many years also so u know.REPLY
March 17th, 2016 at 6:53 pmLee anne aragoza
I am just an ordinary person who works in uae and i just want to try this..as i am very much interested in knowing what this is all about..and start my own in the future..because as a beginner and having not so much money to start with..i really wanna know everything first..many thanks..REPLY
March 18th, 2016 at 5:04 pmTimothy Sykes
Cool, start with these free video lessons https://tim.ly/sykes7REPLY
March 12th, 2016 at 4:48 pmJoseph Neibich
Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. Warren BuffettREPLY
March 12th, 2016 at 4:47 pmJoseph Neibich
Warren Buffett says, Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.REPLY
Chaos of Captivity 