The stock market can be a confusing place for the uninitiated. Financial news is often saturated with bemusing buzzwords; tales from the trading floor of treasury stock, stated value, and retained earnings often mean nothing to the average investor. But for those looking to trade stocks, understanding and applying such concepts is key to navigating this asset class.
Events such as product launches, a new CEO appointment, and earnings announcements are all instances that can move a stock’s price and influence a choice of stock. More of these factors are discussed in the ‘How do you pick the right stock’ section below.on the other hand refer to the proportional ownership of a stock in one particular company. For example, owning 50,000 shares of a company with 1 million outstanding shares would give an investor a 5% ownership stake.
Another consideration is how the stocks fit within a portfolio. For example, a strategy may be to go purely for strong capital gains with growth stocks or add in greater security with dividend stocks or defensive stocks. For more on these types of stocks, see our FAQ section below.Before getting started in stocks, traders and investors should have an idea of their goals, how much money they want to risk, an understanding of their trading style and how to diversify their portfolio.
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