10 Key Stock Market Terms

If the phrase “stock market” alone sounds intimidating – you’re not the only one. For many people, investing seems complicated and “only for professionals.” But in reality, the basic principles are quite simple once you understand the terminology.

Investing, in a broad sense, means putting money in today in order to grow it in the future. This can include a bank deposit, real estate, education, or buying securities.

Broker
A broker is an intermediary between an investor and the stock exchange. Individuals cannot trade directly on an exchange – access is provided by a licensed brokerage company. Through a broker, you can buy stocks, bonds, funds, and other instruments. Brokers charge a commission for their services and, in some countries, also assist with tax reporting.

Securities
Securities are financial instruments that confirm your ownership rights to an asset or your right to receive income. The most common are stocks and bonds. Today, they are almost always electronic records held in a depository rather than paper documents.

Quotes
A quote is the current market price of a security on an exchange. It changes constantly because the market is a balance of supply and demand. More buyers – the price rises; more sellers – the price falls. Quotes reflect investors’ expectations about the future of a company and the economy.

Stocks (Shares)
A stock represents ownership in a company. By buying a share, you become a partial owner of the business.

How does it work? A company wants to raise money for growth and development. It issues shares and sells them to investors through the stock market. The funds raised go toward new projects, expansion, and technology. After issuance, shares continue to trade among investors, and their price changes daily.

Stocks also have the concept of a lot – the minimum number of shares you can buy in one transaction. Sometimes it is 1 share, sometimes several at once.

Dividends
Dividends are a portion of a company’s profit that it pays to shareholders. If the company earns enough, it may share part of its profits with stockholders.

Dividends usually depend on the number of shares you own: the more shares, the higher the payout. However, dividends are not guaranteed, since a company may reinvest profits into growth and temporarily stop payments.

Bonds A bond is a debt security. By purchasing it, you are essentially lending money to a company or government and receiving a predetermined return.

Bonds can be corporate (issued by companies) or government (issued by countries). Government bonds are often considered more reliable because the risk of a government default is lower than that of a business. Every bond has a maturity date – when the borrower repays the principal amount.

Coupon
A coupon is the interest payment on a bond. It is the investor’s regular income for lending money. Coupons may be paid annually, semiannually, or quarterly.

A coupon can be compared to interest on a bank deposit, except here you act as the lender.

Ticker
A ticker is a short exchange code for a financial instrument. It helps quickly find stocks or funds in a broker’s platform. For large companies, tickers usually consist of a few letters. Examples:

• Apple – AAPL
• Tesla – TSLA
• Microsoft – MSFT

Bond tickers can be more complex, often including issue codes or ISIN numbers. Tickers exist for all instruments: stocks, funds, currencies, and commodities.

Blue-Chip Stocks
Blue chips are shares of the largest and most stable companies. They are considered the “backbone” of the market, often included in major indexes and viewed as more stable compared to smaller growth companies. The term comes from casinos, where blue chips were the most valuable.

In the stock market, these are companies that:

• have operated for a long time
• generate consistent profits
• often pay dividends
• are leaders in their industries

Blue chips usually form the core of major stock indexes used to measure market performance.

10. Investment Portfolio
    A portfolio is the collection of all your assets. If you hold different securities and funds, together they form your portfolio. Its purpose is to spread risk and help achieve financial goals – whether capital growth or regular income.

A portfolio is important for:

• diversification (not putting everything into one asset)
• risk reduction
• long-term capital growth

It can be built for different goals: retirement savings, capital preservation, dividend income, or growth through stocks.

Conclusion

The stock market is not a “game for the chosen few,” but a clear system built on simple principles:

• you invest money
• buy financial instruments
• expect growth or income
• manage risks

If you understand these 10 terms, you are already one step ahead of most beginners.