Every Stock Market Term Explained in 13 Minutes

stock represent ownership in a company each unit of a stock is called a share if you own 50% of YouTube's stock you own half of YouTube shareholder someone who owns a stock stock exchange place where investors can buy or sell stocks public company company whose ownership is organized via shares of stock that are intended to be freely traded on a Stock Exchange Bull Market barar Market a bull market means that prices are rising a bare Market means that prices are falling they named after each animal's attack style volatility how fast the stock price moves up

and down volume number of shares of a company traded each day Capital broad term that can describe anything that gives value to its owners it usually refers to money but it can also describe Machinery patents Etc liquidity how easily you can get into and out of a stock it increases with volume bubble bubbles occur when prices for a particular item rise far above the item's real value due to too much optimism sooner or later the high prices become unsustainable and they fall dramatically until the item is valued at or even below its true worth IPO

initial price offering happens when a private company becomes publicly traded in order to raise money dividends portion of a company's earnings that is paid to people who own the stock not every company pays dividends Blue Chip stocks stock that comes from a well-known established company they have a strong history of performance and often pay dividends Forex foreign exchange involves trading different currencies portfolio collection of Investments owned by an investor Holdings contents of a portfolio interests when you get or give a loan the one who is lending the cash usually wants more cash than what he

initially lent the extra cash that has to be given is called interest Bond when an investor gives a loan to a company or a government the investor earns through interest security tradable financial instruments such as stocks and bonds broker since you can't directly go to the stock exchanges to buy stocks someone will do it for you usually for a fee this is called a broker nowadays they are mostly online platforms going long betting that a company's stocks price will increase so that you can buy low and sell High asset resource with economic value that someone

owns or controls with the expectation that it will provide a future benefit commodity basic Goods interchangeable between producers such as grains gold beef oil and natural gas it usually refers to raw materials yield it's what you earned from an investment ptio the price to earnings ratio is one of the most widely used tools that investors and analysts use to determine a Stock's valuation it's one indicator of whether a stock is overvalued or undervalued however the PE Ratio can mislead investors because past earnings do not guarantee future earnings will be the same likewise projected earnings may

not actually happen index it's a method to track the performance of a group of assets indexes typically measure the performance of a basket of stocks intended to replicate a certain area of the market the most famous index is the SNP 500 which tracks the 500 largest US companies Futures contracts that obligate parties to buy or sell an asset at a predetermined future date and price the buyer must purchase or the seller must sell the underlying asset at the set price regardless of the current market price at the expiration date options options contracts give buyers the

right but not the obligation to buy or sell depending on the type of contract an underlying asset at an agreed upon price and date call options allow the holder to buy the asset at a stated price within a specific time frame put options on the other hand allow the holder to sell the asset at a stated price within a specific time frame ETFs baskets of stocks that trade like regular stocks they can be passively or actively managed passively managed ETFs just try to match the underlying stocks actively managed ETFs have a manager or team making

decisions on what stocks to put put in the basket IRAs it stands for individual retirement account and it's a long-term savings account that individuals with earned income can use to save for the future while enjoying certain tax advantages liability something a person or company owes penny stocks shares valued at less than $5 they are usually considered highly risky market cap it refers to how much a company is worth as determined by the stock market leverage it refers to using borrowed money from A lender to invest it's done to increase the potential return of an investment

it also greatly increases risks balance sheet financial statement that reports a company's assets liabilities and shareholder Equity at a specific point in time it provides a list of what a company owns and owes as well as the amount invested by shareholders inflation a rise in prices which can be translated as the decline of purchasing power over time basically money becomes less valuable bid the highest price at which a buyer is willing to pay ask the lowest price at which a seller is willing to sell bid ask ask spread the amount by which the ask price

exceeds the bid price it has to be resolved before the transaction can take place Black Swan it's slang for a completely unforeseen and unexpected event dead cat bounce it's slang for a temporary short-lived recovery of a stock price from a prolonged decline that is followed by even more decline Wales it's slang for investors or corporations with such large Capital that their buys and sells make waves in the market like only animals of gigantic size can unicorns startups that have come to be valued at $1 billion or more named like this for their incredible Rarity to

the moon it's slang for a stock or asset rising in price stratospherically often quickly tanking the opposite of to the Moon stocks depreciating in value often quite significantly and quite quickly jigged out when a market moves into an unfavorable position and you close out your trade only for the market to Rally into a position where you would have made a profit or at least not a loss pump and dump form of fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements pump in order to sell the cheaply purchased

stock at a higher price dump once the operators of the scheme dump sell their overvalued shares the price Falls and the other investors lose their money rug pull a pump and dump in new small cryptocurrencies usually done by their creators Panic selling widespread sell-off of a stock a sector or an entire Market due to fear or overreaction rather than reasoned analysis usually happens when prices start to decrease a lot which makes the price decrease even more stock exchanges temporarily halt trading when Panic selling reaches a specified level in an attempt to break the cycle of

fear and selling shorting investment strategy that speculates on the decline of a Stock's price the investor borrows shares of a stock from A lender and instantly sells them when it's time to give them back the investor has to buy back the shares to reive them to the lender if the price has gone down he keeps the difference between the initial price and the new price this however comes with unlimited risk as the stock price can go up infinitely and the investor is forced to buy it back short squeeze when the Stock's price unexpectedly increases drastically

over a short period of time the investors who were shorting are forced to cut losses by exiting their positions which means buying back the stocks to regive them to the lender this makes those investors lose money and it makes the stocks price increase even more since all of the short investors have to buy it limit order it's an order to buy or sell a stock at a specific price or better stoploss order order placed to buy or sell a specific stock once the stock reaches a certain price long squeeze basically the same thing as the

short squeeze but those who are going long get squeezed this is usually caused by the trigger of many stop-loss orders and by people panic selling Market order it's an order to buy or sell a stock at the best available price in the market it typically ensures execution but it doesn't guarantee a specified price it's kind of like buying a product without negotiating good till canceled order it's an order to buy or sell stock that lasts until the order is completed or canel day order it's in order to buy or sell a stock at a specific

price that expires at the end of the trading day if not completed averaging down it's a strategy that involves a stock owner purchasing even more stocks when the price drops as the name says it decreases the average price at which the investor purchases the stock fading a Trader who deliberately goes against Market sentiment or Trends Hedge fund limited partnership of private investors whose money is managed by professional fund managers who use a wide range of risky strategies to earn above average investment returns they usually require a high minimum investment or net worth and they often

Target wealthy clients mutual fund they pull assets from shareholders to invest in stocks they are operated by professional money managers who allocate the funds assets and attempt to produce gains for the funds investors mutual funds give small or individual investors access to professional managed portfolios each shareholder therefore participates proportionally in the gains or losses of the fund control stock refers to shares owned by Major shareholders of a company these shareholders will have either a majority of the shares outstanding or a portion of the shares that is significant enough to allow them to exert a controlling

influence on the decisions made by the company holding company businesses that don't produce or sell anything but they hold the controlling stock in other companies the companies owned by a holding company are called subsidiaries while it May oversee the company's management decisions it does not actively participate in running the day-to-day operations of its subsidiaries Index Fund type of mutual fund or ETF with a portfolio constructed to match or track the components of an index such as the S&P 500 day trading it's a fast-paced trading strategy where individuals buy and sell stocks within the same trading

day the primary goal of day Traders is to profit from short-term price movements swing trading swing trading is a medium-paced trading strategy with trades that last from a couple of days to several months the goal is to profit from an anticipated price move intrinsic value measure of what an asset is worth it's usually different from the current market price of that asset Book value it's the value of a business according to its books it theoretically represents what investors would get if they sold all of the company's assets and paid all its debts while intrinsic value

takes into account estimates for the future Book value only measures the present price tobook ratio it Compares a share's market price to its Book value value investing it's a trading strategy that involves picking stocks that appear to be trading for less than their intrinsic or Book value value investors usually believe that the market overreacts to good and bad news and buy stocks that they think the market is underestimating growth investing growth investors typically invest in young and small companies whose earnings are expected to increase at an above average rate compared to the market this can

provide better returns but it also often comes with more risk risk earnings per share it indicates how much money a company makes for each share of its stock by dividing its net profit by the number of common shares it has outstanding technical analysis it's a trading strategy employed to identify trading opportunities by analyzing statistical Trends fundamental analysis fundamental analysts identify trading opportunities by analyzing the actual factors of the company such as its competitors its management Effectiveness the state of its industry Etc efficient market hypothesis it's the hypothesis that share prices reflect all available information making

it impossible to beat the market consistently supply and demand Supply refers to the quantity of a good or service available while demand is the quantity that people want if demand is high and Supply is low prices tend to rise if Supply is high and demand is low prices tend to fall insider trading it's the activity of trading in a public Company's stock by using information that is not available to the public this information is usually gathered from employees of that company managers Etc this is illegal most of the time ticker symbol it's just an abbreviation

used to uniquely identify publicly traded companies compound interest it means earning interest not just on your original investment but also on the interest you earned over time this creates an exponential curve of earnings over long periods of time profit margin it's the percentage of profit a company makes from its Revenue after subtracting all of its costs dollar cost averaging it's a strategy that consists of investing a fixed amount of money at regular intervals regardless of the assets price this helps reduce the impact of Market volatility return on investment it's how much profit or loss you've

made on an investment relative to its cost shout out to these guys who are the first patrons that support my channel you can end up on this list as well check out the link in the description