1. Day Trading Terminology

What is a Stock?

When you buy stock, you are actually buying a small portion of the company and becoming a partial owner or shareholder.

This means you have a claim on the company’s assets and earnings based on the number of shares you own. You also have the right to vote at board meetings.

The price of a stock is different for each company but is largely based on supply and demand. The more demand for a stock the higher prices will be and vice versa.

Private companies issue stock or shares to the public through an Initial Public Offering after meeting specific guidelines set by the Securities and Exchange Committee.

There are thousands of companies that trade publicly in the US market alone.

However, they generally offer only two different types of stocks: common stock and preferred stock.

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