Online Stock Trading Key Terms

Stock up on terms to know when it comes to online stock trading

By L. Newton

Online stock trading has become a lucrative and rewarding business for traders and investors. No longer do they have to visit or call stockbrokers to execute trades. Traders and investors also don’t need to rely on analysts to obtain research reports on companies. Instead, they can get this information by having an online brokerage account. To make online stock trading a successful experience, here are some key terms with which to be familiar.

Stock trading

Stock trading consists of buying and selling stocks. Each time you execute a trade with your online broker, you will see two different prices, bid and ask. The ask price is what you agree to pay when purchasing shares. The bid price, on the other hand, is the price your broker agrees to when you want to sell your shares.
Try: Get in-depth information of how stock trading works by visiting TradeStars.

Online brokerage account

Opening an online brokerage account involves filling out an application. Information you will have to supply includes your name, address and phone number. The online brokerage firm will then process your application. Once you are approved, then you fund your account with cash. Most, if not all, online brokerage firms will allow you to link your bank account with your brokerage account. That way, you can transfer money back and forth.
Try: TD Ameritrade outlines the steps you need to complete in order to open an online brokerage account.

Stock chart

A stock chart is made up of an axis, X and Y. The chart contains the stock's price and time. Chart analysts can analyze the movement of prices over a period of time.
Try: RightLine gives a good description of what stock charts are and how they can be created.

Technical analysis

Technical analysis involves trying to forecast the stock price's direction. Using mostly price and volume, technical analysts base their forecasts on the stock's historical price data.
Try: NewsMonster provides comprehensive information about technical analysis.

Fundamental analysis

Fundamental analysis is an investment technique that focuses on the company's value. This involves investigating the company's earnings, profits, revenues or market share. Fundamental analysis also involves looking at the company's debts or liabilities. If the company's fundamental analyses are good, then the stock may be a good candidate to buy.
Try: Stock Investment Made Easy not only defines what fundamental analysis is, but discusses the advantages and disadvantages of using it.

Stock ticker

The stock ticker shows the stock's most recent bid (or offer) and volume. It scrolls across the screen.
Try: Investor Words gives a definition of a stock ticker.