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If you are new to investing, stock trading terms may be confusing. It is important to know some basic terms and add to your knowledge as you progress in your stock trading experience. Following is a short list of terms you will hear most often. For each of these, there is more involved than what you will see here. Just knowing the basics will help you more readily absorb the rest. Eventually, you will be an expert! Common Stock - Common stock is the cheapest stock in the company. If the company earns money, the stock's value increases. If the company loses money, the value decreases. Common stockholders do not have a voice in the company's dealings. They are also the last to receive any money if the company goes downhill. Preferred Stock- This stock implies greater ownership in the company and gives stockholders a voice. The more preferred stock you have, the more say you have in the company's decisions. Preferred stock is considered before common stock when the company goes bankrupt, but creditors get their money, first. Aggressive - To invest aggressively is to take higher risks with your money. Example - Investing a large amount of money in one company's stock with the hope that the company will make a huge profit. Conservative- To invest conservatively means to invest in stocks that are low risk. The profit is smaller, but the risk of losing money is greatly reduced. Capital Gain- How much capital the stock investor has above the initial cost of the stocks. When the stock is sold at a profit, the investor has gained capital. Capital Loss-How much the investor loses over the stock price going down. If he sells at a loss, it is called a "capital" loss. Basically, he loses capital. Current Market Value- This is how much your accumulated investments are worth at the current time. Diversification - This is when investments vary throughout the portfolio. A diversified portfolio may have real estate investments, stock investments, and bonds. It could have a 401K plan, IRA's (Indidual Retirement Accounts), and several acres of land... The idea of diversifying the portfolio is to protect your total investment. The assumption is that at least some of will do well even when others fail.
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==== ==== Please check out Trading Pro Edge System for great tips on Stock Trading for Profit. www.tradingproedgesystem.com ==== ====