Stock Market Basics
What does it mean to buy a stock?
You are buying partial ownership in a company.
What does the x-axis on a stock chart represent?
Time.
What does a green candlestick usually mean?
Price closed higher than it opened.
What is diversification?
Spreading investments across different assets.
What does revenue measure?
A company’s total sales.
What is the difference between the NYSE and NASDAQ?
NYSE is a physical exchange and NASDAQ is fully electronic
What is a trendline used for?
To identify the direction of price movement.
What does heavy buying near the low of a candlestick suggest?
Buyers are stepping in at support.
Why is investing all your money into one stock risky?
One loss can wipe out your portfolio.
What does profit tell investors?
How much money a company keeps after expenses.
What happens to a stock’s price when demand exceeds supply?
The price rises.
What does support represent on a chart?
A price level where buying pressure prevents further decline
What does heavy selling near the high of a candlestick indicate?
Sellers are gaining control near resistance.
What is a stop-loss order?
An automatic sell to limit losses.
What does the P/E ratio compare?
Stock price to earnings per share.
What is an IPO?
When a company first sells shares to the public.
What does resistance represent?
A price level where selling pressure prevents further increase.
What does a long red candlestick indicate?
Strong selling pressure.
What is risk tolerance?
How much risk an investor is comfortable taking.
Why is debt important to analyze?
High debt increases financial risk.
What does market capitalization measure?
A company’s total value (price × shares outstanding).
Why is volume important when analyzing breakouts?
High volume confirms stronger price movement.
Why are candlesticks better than line charts for traders?
They show open, close, high, and low prices.
Why do long-term investors usually accept short-term volatility?
Markets tend to grow over time.
What is the goal of fundamental analysis?
Determining a company’s true value.