Virtual Money FAQ
Here is a list of terms and concepts that you will need to know to learn stock trade.
- What is a stock?
- What is a Stock Symbol?
- What is a limit order?
- What is a stop order?
- What is trading paper?
- What is day trading?
- What are options?
- What is a put option?
- What is a call option?
- What is a strike price?
- What is a stock broker?
- What is an ask price?
- What is a bid price?
- What is the spread?
- What is a dividend?
- What is a bull market?
- What is a bear market?
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What is a stock?
A stock is the part ownership of a business. They can be bought and sold based on market prices. Many free stock market games on the internet allow you to practice buying stocks through paper trading.
What is a Stock Symbol?
A Stock Symbol or “Ticker Symbol” is a new UNIQUE designation for the stock. Company names can be vary and change and be very long. Since 1867 we have been using symbols to make things more clear. They are generally three to four letters. They can, however be one to eight letters and numbers long. For example Apple is “AAPL” and Southwest airlines is “LUV”.
What is a limit order?
A limit order is when a trader tells their stock broker not to buy or sell until the stock’s price reaches a certain amount. Limit buys sets a price ceiling and a limit sell sets the price floor.
What is a stop order?
A stop order, or stop loss order, is similar to a limit order. It is an order to buy or sell a stock once the price reaches a pre-determined rate.
What is trading?
Paper trading is the practice of trading stocks in a simulated environment where real money is not involved. Any gains or losses made are not reflected with actual currency. Online trading in a stock market game is one example of this.
What is a Day trading?
Day traders buy and sell the same stock or other assets within a single trading day. Sometimes within in the same minute.
What are options?
An option, also called a stock option, is the privilege, but not requirement, to buy or sell stock at a set price by a certain date. There are two varieties: call and put. To learn more, visit Option Strategy.
What is a bid price?
A bid price is the price at which a holder is willing to buy their commodity at any given time. These commodities can be stocks, bonds or other securities.
What is the Spread?
The spread is the difference between the ask and bid prices.
What is a dividend?
A dividend is a payment made by a company to it’s shareholders. It is the portion of profits that the company has made and has decided not to reinvest. Some companies will never have dividends, others will have monthly dividends and some will be sporadic.
What is a bull market?
A bull market is when the market is trending upwards. This means most stocks are increasing in price.
What is a bear market?
A bear market is the opposite of a bull market. In a bear market the market is trending downwards. This means most stocks are decreasing in price.
What is a put option?
Also called simply “puts,” this is the option to sell the stock at a strike price. To learn more, visit Options Trading.
What is a call option?
Exactly the opposite of a put option, a call option is the right to buy a stock at the strike price. To learn more, visit How To Trade Options.
What is a strike price?
A strike price is the pre-determined price at which an option can be bought or sold.
What is a stock broker?
A stock broker is a professional stock trader who buys and sells stocks, bonds and other items through agencies or on behalf of investors. It is not necessary to have a stock broker to trade on the stock market!
What is an ask price?
An ask price is the price at which a holder is willing to sell their commodity at any given time. These commodities can be stocks, bonds or other securities.