It is very essential to understand stocks investments terms before you get started. It will enable to interpret what the newspapers, your broker, and stock exchanges mean. If you are a fresher to stock market investing,
you should know several stock market terms before you make those first trades. Stock market investing is somewhat complex. Study these terms to obtain a fundamental understanding of the stock market, and then start digging deeper.
Here are a few of them:
Ask price: a term used to show the amount or price in which the sellers of the penny stocks want to sell their shares of stock to the buyers.
Balance sheet return: This term stands for the measures of a penny stock company, productivity and company value. The balance sheet return typically contains measures like the book per share, profit margin, return on equity, sales/price ratio,
price/book ratio, and the reporting date.
Basher: It is someone who posts information on a message board for driving the penny stocks prices down.
Bid price: This is the price at which you can sell your stock.
Blue Chip Stocks - it describes the stocks owned by firms that are considered secure and less uncertain than other firms. They generally have a large market capitalization.
Block trade: In penny stocks lingo, block trade refers to a trade of 100,000 shares or more.
Canceled order: This is a buy or sell order that is canceled before it has been executed. A canceled order can also refer to the cancellation of a limit order, or a market order.
Capital stock: This is the amount of property contributed by stock holders that are used as the financial foundation for the company. Capital stock may be either common or preferred stock.
Current P/E ratio: This refers to the ratio of the current price divided by the last two quarters earnings per share (EPS), plus the next two estimated quarters earnings per share.
Day order: A day order is an order that remains open for one trading day until it is executed or canceled.
Discount broker: This is a broker who offers low-cost deal fees. The discount broker’s prices are low because he does not offer investment advice.
Due diligence: It means undertaking research work before investing in penny stocks
Float: This refers to the number of shares a stock has available for trading purposes.
Full service broker: This is a broker who offers a full range of investment brokerage services, including financial advice and portfolio management.
Fundamental Analysis - analyzing stocks involves examining important financial data of a company which includes financial ratios, profits and revenues, press releases, among others. It is a way to verify which stocks are investing worthy.
Limit order: This is an order to buy or sell a stock at a price specified by the customer. If you set a limit order you can specify the maximum price you want to pay for your purchase or the minimum price you will accept to sell your stocks.
Market Capitalization - a term used to indicate a corporation's value. It is calculated by multiplying the price per share of the stock and the total number of shares of the corporation.
Market Orders - when an investor places an order to buy or sell shares of stock without indicating any desired amount of the stock price.
Market maker: This refers to a brokerage or a bank that represents a stock, and competes with other market makers to buy and sell the stocks. The market maker displays buy and sell quotes.
Pink Sheets: Pink Quote, informally known as the Pink Sheets, is an electronic quotation system operated by Pink OTC Markets that displays quotes from broker-dealers for many over-the-counter securities. Market makers and other brokers can use Pink
Quote to publish their bid and ask quotation prices. The term Pink Sheets is also stands for a market tier within the current Pink Quote system.
Pump and dump: This is a penny stocks trading strategy where the prices of the penny stocks usually rise quickly because of hype, and falls drastically when the hype-makers
unload their stocks.
Spread: This refers to the difference between the bid price and the ask price.
Stop limit: This is an order that combines both the stop and the limit order. If you put and activate a stop limit, your order can be executed up to your limit price. If the trading goes beyond your limit ceiling, your trade will not be executed.
Stocks: Stocks are shares in a company that are traded on the stock market. Shares are bought at the current sale price and then sold at will in the future for either a profit, loss or at a dead even break.
Tanking: Tanking is when penny stocks lose their value very quickly.
Penny stocks allow investors to get a thousand shares. It is so because a number of penny stocks are out there for relatively cheap prices. If the company gets a big order
for products, the stock could climb to almost a dollar in a matter of days. At the same time there are many investors who lose everything in their stock investing due to lack of proper planning. The following points can help you to become a good
investor and earn much.
Have a plan
It’s good not only to have a specific method for selecting and entering trades, but also to have a plan for liquidating trades. Exit a trade whenever one of the following conditions is met: The expected catalyst fails to develop or the stock
fails to respond as anticipated; or the stock fails to respond within a predefined length of time.
Doing your own research
Before starting your investments, spend a lot of time reading and learning about investing and stock picking by visiting online financial resources and reading books, periodicals and other educational material. Read all of the relevant articles that
you can, follow the headlines, watch the videos on financial networks, and devour investing books designed for the beginners. Discover where your friends get their information. If they have a broker that has made them a lot of money, ask for a
referral. If they have their own strategy, ask them to teach you.
Invest With Small Amounts of Money
A lot of first time investors seem to forget this golden rule. The money you invest should not be the money you rely on to sustain your standard of living. Otherwise it will increase the pressure you’ll feel while you invest, and can’t
protect your financial health for fear that you somehow lose every penny.
Invest with a small amount of money which is the best way to begin for the first time because it lets you get a feel for the stock market. Besides it also keeps you safe from any major losses. There is little risk for loss with a small amount
invested, but your potential knowledge and experience gained is unlimited.
Create a fake portfolio
Places like Google and Yahoo have sections that let you to track your investment portfolio. If you are interested to own individual penny stocks, and then you must make
researching your penny stocks repeatedly. You should have some knowledge about what can affect your penny stocks before any news hits or anything happens. Don’t go for investment your real money until you’re comfortable about making money
by your practice portfolio.
Foresight
A good stock picker can think ahead. They can assess and foresee the next gadget that people can’t live without or the next emerging market only a few years away from being a world top financial system.
Dispose of your credit card debt.
It is very important to first retire or control the debt before beginning to invest in serious. It is good if you had no debt at all. For many people, being able to chuck out debt absolutely is just not practical. If you have credit card debt, you
may be a sufferer, because of the high interest rates on credit cards and the relatively small amount of money investment as a new investor, credit card interest will easily destroy your gains. If your annual interest rate on your cards is 15%, there
is a very high degree of possibility that your new portfolio isn’t going to make 15%.
Statistics show that the average American has $5,000 in credit card debt. If this describes you, you’ll probably be unable to afford investing in penny stocks while you manage your debt.
Not Trading too much
Never let fees and taxes dictate your trading moves. If you have to change your position, do it. But don't ignore fees and taxes, and don't get trade happy.
- 
