Stock Market Basics Everyone Should Know
Updated: Nov 4, 2022
This week on the blog...
The stock market can be confusing, especially when so much information AND misinformation is out there.
If you’re unfamiliar with the stock market, it can feel very “risky”, and overwhelming. People tend to look at the market as if they are gambling, which in their head = devastating losses. Thus, much of the negative sentiment towards the stock market is due to the lack of understanding, and hyper sensitivity toward what “could” happen, not what is probable.
So let’s go through some of the basics.
What is a stock?
A stock is sometimes referred to as a “share” or a “unit”, which quite literally is equal to a share of a company. When you own a share, you own a small portion of that company which entitles you to a fraction of the assets and earnings of the business. Yay, you become a business owner!
What is “the market” when we all refer to the “market”?
The market is essentially a marketplace where shares of stock are bought and sold.
The two largest markets in the United States are the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASDAQ). In Canada we have the Canadian Securities Exchange (CSE) or the Toronto Stock Exchange (TSX).
When we talk about the “market” going up and down, we are usually referring to one of the indexes, which take a big sample size of different sectors to determine the amount the “market” goes up and down. When the “market” is up or down, it doesn’t mean EVERY stock is up or down, just the sample size, which pulls from them all.
What are brokers?
These are the people making purchases for their clients. However, with the new age of the internet, it’s extremely convenient and reliable to make your purchases online as an alternative, using online “brokerages” – where you can place your trades online, rather than with a person.
What are the best online brokerages?
I use Questrade in Canada. They provide low fees, and access to most of the funds and stocks available to buy in the world! If you are in the USA, I recommend E-trade! However, there are TONS of online brokerages in the world.
Here’s a referral code (called a QPass key) to input if/when you are opening a Questrade account in Canada. When you input this code, you get FREE money to sign up! 616528712448277
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