Common Stock Market Terms

In this article, I will go over some of the common stock market terms.

Stock Market: a way to bring people together to buy and sell shares of stocks, as well as other investments such as bonds and security.

Trading Floor: one way to bring people together to buy and sell shares of stock is through a trading floor. For example, the New York Stock Exchange uses a trading floor were buyers and sellers of stock negotiate their trades face-to-face.

Electronic Exhange: this is where a stock market brings buyers and sellers together electronically, through a computer network, using an electronic exchange. An example of this would be the NASDAQ Stock market.

Stock: Stock means supply. Each piece of stock represents a share that you own over company. Each share you own grants you one vote for that company's Board of Directors, which is how you exercise your ownership in the company.

Bull Market: this occurs when the stock market as a whole has been favorable to investors. This is characterized by the price of stocks generally rising over an extended period of time. It's easy to remember — a bull will go back on its hind legs before it charges upward to attack.

Bear Market: this is the opposite of the bull market. Here, the market has generally declined in value over a period of time. It's called a bear market because when a bear attacks, it strike down at you.

Dividend: some companies offer to share their profits with their shareholders, instead of investing them back into the company. The way they offer these profits is in the form of a dividend. Typically, dividends are paid out twice a year. And if there is no profit, then you receive no dividend. The company controls how much of a dividend they will pay out.

Stockbroker: a stockbroker is the person who negotiates the buying and selling of stocks for you. They will either put a call into a floor clerk, to negotiate on your behalf, or be able to access an electronic network to purchase or sell your stock for you. You can use a full-service broker, who also offers you expert advice for a fee. Or you can use a discount broker, simply to place trades. Also, you can use an online broker.

There you have it — a simple guide to the most common stock market terms that you are likely to encounter when first learning about the stock market.

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