Basic Terms Every Stock Trader Should Know

Below are several stock market terms that every trader should know:

- Bear market: This term refers to a downward trend in the market. In a bear market, stock prices are consistently falling. It is the opposite of a bull market, a prolonged period of rising stock prices.

- Blue-chip stock: Established, financially sound public companies are often called blue-chip stocks. These companies can be national or international entities, but they are all known for their good value and profitability.

- Dividend: People who own stock in a company, or shareholders, received some of the company’s earnings every quarter or year. The term dividend is used when discussing these payments.

- Price Earnings Ratio: Also known as the price-to-earnings ratio or P/E ratio, the price-earnings ratio shows how the stock price relates to how much the company makes per share. It is calculated by dividing the stock price by the earnings per share (EPS).

- Volume: Traders use this term to convey the number of shares that were traded within a certain amount of time. The volume is often measured in daily trading volume and provides traders with an idea of how much interest a particular stock has.

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