Stock Market for Beginners

Stock Market for Beginners

Most people understand the importance of making their savings work for them. Investments are one of the best ways to grow savings, and the U.S. stock market offers a vast number of opportunities for capital investment.

Trading on the stock market may seem daunting and mysterious for beginner traders – an overwhelming number of charts, tables, and unfamiliar terms. To assist novice traders, we’ve prepared a list of key concepts and terms used by stock traders and frequently encountered in stock market analytics. This list can be considered the foundation of knowledge necessary for further education and working with stock market information.

Terms Every Beginner Trader Should Know

• Day High – commonly referred to as "high" among traders. This term denotes the highest price of an asset during the day.
• Day Low – similar to Day High, it is often abbreviated as "low." It indicates the minimum price of a stock for the day.
• Consolidation – also known as "base" or "stagnation," this term describes prolonged price stability. Graphically, it is depicted as a horizontal channel with minimal variation between the lower and upper price limits.
• Breakout – a situation where the price breaks through a support or resistance level.
• Bid (Bid Price) – the highest price a trader is willing to pay to buy.
• Ask (Ask Price) – the lowest price a trader is willing to sell for.
• ECN (Electronic Communication Network) – an automated electronic system for buying/selling assets on the stock exchange.
• EPS (Earnings Per Share) – the ratio of a company's total profit (after expenses and taxes) to the number of common shares in circulation.
• Gap – a price gap, representing an interval where there was no liquidity, and no trades were executed. For instance, a stock trades at $10 before news is released, then jumps to $15 after positive earnings are announced, skipping prices like $11, $12, $13, $14.
• Limit Order – an order with a specific price, executed when the stock's price matches the order price.
• Long – a "long position," or buying assets to profit from their rise.
• Short – a "short position," or selling borrowed assets to profit from their decline.
• Offer – essentially the same as Ask, representing stocks offered for sale.
• Print – the published record of a trade, including its price and volume.
• Position – also known as "open position," existing while a trader holds the shares.
• Range – the price range, formed by support and resistance levels, within which a stock's value fluctuates over time.
• Share – a stock.
• Spread – the difference between the highest Bid and the lowest Ask.

• Stop Loss – protective orders to prevent losses.

  • Buy Stop – to limit losses in short positions.
  • Sell Stop – to limit losses in long positions.

• Trend – the direction of a stock's price movement (upward, downward, or horizontal).
• Uptick – a trade whose price matches or exceeds the previous uptick trade's price.
• Time Frame – a time interval on a chart.
• Momentum – a brief phase of rapid price movement with increasing volume, where market activity significantly intensifies.
• Slippage – a market phenomenon occurring with low stock liquidity. For example, a trader sets a stop at $35.00, but it executes at $34.95, which is $0.05 lower than the set stop price.
• Short Squeeze – a situation where the price of stocks or other exchange instruments rises sharply due to a reduction in sell orders. Demand for the traded instrument increases as sellers close their positions to avoid significant losses.
• Pump and Dump – a fraudulent tactic where traders artificially boost interest in pre-purchased securities to sell them to poorly informed and inexperienced investors at significantly inflated prices.
• Buying Power (BP) – a trader's purchasing power, i.e., the funds they can use to place buy and sell orders for securities. BP is set individually for each trader based on preferences and experience. For accounts starting at $2,000, BP can exceed $300,000.
• Pre-Market – trades conducted an hour before the official market opens. Activity during this time is low, allowing experienced traders to observe the difference in buy/sell orders across various tickers. Pre-market trading is useful when a company releases earnings before the market opens, helping determine the opening price and buyer-seller ratios.
• Post-Market – trades conducted after the market closes. Many traders close intraday positions during post-market trading rather than carrying them overnight. It is used when a company releases earnings immediately after the main market closes.

When Does the U.S. Stock Market Operate?

Unlike the Forex market, which operates around the clock, the U.S. stock market trades during strictly defined hours, known as the trading session. The American trading session runs from 9:30 AM to 4:00 PM local time (New York). If you're in the GMT+3 time zone (Kyiv, Moscow), the schedule is as follows:

• 2:00 PM – Pre-Market: orders can be placed.
• 4:30 PM – Market Open: trading session begins.
• 11:00 PM – Market Close: trading session ends.
• Up to midnight – Post-Market.

The above information is just the first step toward mastering the profession of a trader. Before starting to trade on the stock market, you need to acquire the necessary minimum of theoretical knowledge and stock exchange concepts. You can do this independently by taking a free training course. For a deeper understanding of trading, it's advisable to enroll in group training. This allows you to interact with a mentor, jointly analyze trades, and identify mistakes. You’ll be able to grasp information through practical examples. For beginners, it is strongly recommended to test your skills on a demo account in this case.