- Trading in the stock markets has been gaining in popularity around the world, especially in India. Millennials and gen-z are turning to the stock markets to supplement their income from their day jobs. This has been caused by growing awareness about the stock market and easy access to trading services at a low cost.
Before you can begin trading in the stock markets, you need to learn the basics of how the stock markets work. This is why we’ve brought you this article which covers the important trading terms and its definitions that you need to know about the stock market.
What is stock trading?
Stock trading refers to buying and selling stocks. While “stock investing” involves buying shares and holding them for a relatively long period of time, “stock trading” involves closing trades on the same day or within a few days. Stock trading is usually done through technical analysis which can help predict future short-term price movements of stocks.
Why should teenagers and students learn stock trading?
It takes experience to do well in the stock markets. This is why it is important to start learning about stock trading as soon as you can. It is ideal to start learning about the stock markets when you’re still a student because you do not have the pressure of financial obligations. This is the best time to experiment, fail, and grow, as a trader.
Even if you do not have money to trade in the markets, you can still learn about the stock markets through free resources.
How can I learn stock trading as a teenager?
Here are some of the most common ways you can start learning:
1. Through trading websites and blogs
There are several online resources that can teach you the basics (and the intricacies) of stock trading. You can find these websites and blogs by a simple Google search. Once you have several blogs in mind, you can compare them, and then choose two or three blogs to follow regularly and learn from.
2. Through books
To get detailed information about a stock trading topic or concept, it may be best to invest in a book. Even though books take longer to read, they provide more comprehensive information.
3. Through mentors and advisors
You can connect with like-minded people online who also want to grow as traders. If they’re ahead of you on their stock trading journey, you can listen to them for advice on how to be a better trader.
4. Playing stock market games
The best way to learn the stock market as a teenager is through playing fantasy stock market games. To learn how to play stock market games without risking real money, check out the last section of this article.
Basic Stock Trading Terms and Definitions for Beginners
Here are some of the trading terms and definitions that you need to know:
Bull market |
A market characterized by rising prices.
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Bear market |
A market characterized by falling prices.
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Broker |
An individual or firm that acts as an agent between buyers and sellers of securities.
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Bid-ask spread |
The difference between the highest price a buyer is willing to pay for a security (the bid) and the lowest price a seller is willing to accept (the ask).
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Dividend |
A distribution of a portion of a company’s earnings to shareholders.
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Earnings per Share (EPS) |
A company’s net earnings or profit divided by the number of outstanding shares.
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Short selling |
Selling stocks that a trader does not own in the hope of buying them back at a lower price.
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Market capitalization |
The total value of a company’s outstanding shares of stock.
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Mutual fund |
A type of investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities.
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Options |
Contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.
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Over the Counter (OTC) |
A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX.
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P/E Ratio |
Price-to-Earnings ratio, used to compare a company’s current stock price to its per-share earnings.
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Portfolio |
A collection of investments held by an individual or an institution.
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Stop loss order |
An order placed with a broker to limit a trader’s loss on a trade. This order can be either a buy order or a sell order.
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Technical analysis |
A method of predicting the future price of stocks by using statistics.
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Volatility |
The movement of the prices of stocks in the market. The more the movement, the higher the volatility.
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How to practice stock trading without risking money?
A great way for beginners and teenagers to learn about the stock market and trading is through playing stock market games. TradingLeagues stock market game app offers several types of educational and fun stock market games that are suitable for beginners.
These stock market games are based on the real stock market, hence, you get real-world experience about what it’s like to be a stock trader.
You can choose from four different types of games:
Battle Leagues
Target Leagues
Selection Leagues
Classic Leagues
This means that you can learn while playing a game of your choice and skill level.
The primary advantage of using TradingLeagues to learn stock trading is that all the games are highly entertaining while also being challenging. You can compete with other real players to see who can make better predictions.
There is no real money involved so there is no stress. There are both free and paid games, so you can choose what you like.
Further, you can get exposure to a lot of different markets. If you like the Indian markets, then you can play in the Indian markets. If you like the US markets, then you can play in the US markets. If you like crypto, then that’s available too. You’re spoilt for choice.
Wrapping up
Learning how to trade in the stock markets as a teenager can help you gain real-world experience. Use TradingLeagues app to level up your skills while having fun. You can also play with your friends and compete with them for bragging rights.
