“Nakita mo na ba yung bull stock? Parang magbear na siya this week.”

“Nag-IPO na yung negosyo.”

“Gamitin mo lang yung moving average sa mga blue-chip stocks.”

Are these common phrases in the stock market confusing you? This article’s got you covered. These are some essential stock trading terms for beginners.

Bull/Bear Market

Bull and Bear are terms used to describe a stock market or stock trend. Bull, which is often depicted as a bull’s horn pointing upwards, describes a stock or stock market price that is expected or is on the rise. Bear, on the other hand, is the opposite of a bull market. This means that the stock or stock market price is declining or expected to decline.

Blue-Chip Stock

A stock can be recognized as a blue-chip stock if the company it represents is well known, have a good reputation, and often are leaders in their respective industries. Blue-chip stocks are known to deliver superior returns in the long run as well as have consistent annual revenue over a long period. Some examples of blue-chip stocks in the Philippines are Ayala Land, San Miguel Corporation, and BDO Unibank Inc.

Shareholder

A shareholder can be any person, company, or institution that owns at least one stock from the company. Shareholders are essentially owners of a company and therefore, get to reap the benefits of a business’s success in a form of increased stock prices and in some cases, dividends.

Contrarily, if the company loses money, the stock price drops and the shareholder will lose money. Shareholders who own more than 50% of the company’s stocks are known as majority shareholders while anyone with less than 50% is called minority shareholders.

Dividend

As said, some companies offer dividends to their shareholders. A dividend is the distribution of a percentage in the company’s earnings. Dividends aren’t mandatory. This means that the company is solely responsible for deciding what percentage of their earnings go to the shareholders and how often they are willing to give it throughout a year. Dividends, depending on the company, can be paid out in cash or additional stock shares.

Initial Public Offering

An initial public offering, also known as an IPO, refers to the process of turning a private corporation into a public one. Prior to an IPO, the private corporation has a small number of shareholders which usually includes the founders and their family and friends.

The IPO process allows the corporation to issue new stocks for anyone in the stock market to invest in their company. This means that they are willing to open their corporation to the stock market and therefore, offer the company an opportunity to gain more capital.

Moving Average

In a mathematical perspective, a moving average is calculated by adding the price of an instrument over a number of time periods and then dividing the sum by the number of time periods, shown in the picture below.

It determines the average price of the given time period, with equal weight given to the price of each period. The moving average is used as a stock indicator, usually calculated to identify the trend direction of a stock or determine its support and resistance levels. Most traders use this because it is based on the historical data of the company which makes predictions more accurate.

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Are you someone interested in stock trading but are too intimidated to start? Well, look no further because this article is here to help beginner stock traders get a better understanding of the financial stock market.

Experienced stock traders have developed some rules to help beginners such as yourself not make the same mistakes as they have done. Here are some of the essential do’s and don’ts of stock trading.

DO PRACTICE-TRADING BEFOREHAND

A large number of beginners have no clue where to start. This is why platforms, such as Investa, come in handy. Before using your hard-earned money, try utilizing these platforms to practice trading. These practice trades don’t use real money so you don’t need to be worried about not getting it right the first time.

Practicing leads to a better understanding of what you’re getting yourself into and what to look for in different scenarios. This is the first step to help you better grasp the stock market and be more decisive of the decisions you make later on with the real thing.

DON’T HAVE HUGE EXPECTATIONS

A common misconception about stock trading is that people make a 500% return on the first day. 99.9 percent of the time, that isn’t the case. Remember that stock trading is an investment and you have to be prepared to not see that amount of return right away.

Don’t compare yourself and your earnings to traders that have 10 or 20 years more experience. As a beginner, set realistic and achievable goals for yourself.

DO THE RESEARCH

As a beginner, you will want to seek advice on what stocks to buy from family, friends, and even experienced traders. The mistake only comes in if you invest in stocks blindly. Advice on stocks is only there to guide you to what stocks to look out for but you have to make sure that you do some research before putting your money in it.

Don’t forget, this is your money on the line. Some stocks may fit the needs and goals of others more than it fits your goals. To know if you’re investing in the proper stock for you, do the research into the company. Some of the ways you can do that are by watching the news and by looking into the company’s financial reports.

DON’T GET DISCOURAGED

Beginners frequently stop trading when they see losses or aren’t making the money they thought they would. Don’t forget that you’re still learning and coming across red markets are part of the lesson plan.

Keep the mindset that red markets don’t stay red forever and you need those days to show you what you did wrong and what you’ve done right.

DO BETTER

The best and most important advice any experienced trader can give is to always strive to do better. Never quench that thirst to learn. Nowadays, there are so many avenues where you can learn more about stocks and the stock market. Find time out of your day to watch a 10-minute video from experienced traders or read a 5-minute article about the dos and don’ts of the market.

Learning doesn’t just come from tutorials. Learn from your mistakes and grow from those difficulties. The only way to be better is to keep learning.

We all feel down at some point in our trading career. Just like a heartbreak, a devastating big loss or series of losses will make you feel miserable and more often, you are looking to quit. This is the time you are already conscious that you are still incompetent in the craft of trading. You know, deep inside, that you do not know anything yet.

If you have come to a point that you are aware and conscious that the craft of trading is not as easy as you think, then congratulations, you levelled up from the Infancy Stage. This is where most traders realize that the promised quick money, passive income, and life by the beach is not aligned with what they have been expecting.

Conscious Incompetence Stage is where most traders quit, get stuck, or worst is that they revert to the Unconscious Incompetence stage and have that never ending cycle of non-profitability.

Common Characteristics of Traders in the Conscious Incompetence Stage:

Finding the Holy Grail

With a recent heartbreak with Ms. Market, traders embark in a quest to find the perfect strategy, THE HOLY GRAIL. They begin increasing their knowledge by going to trading groups, applying for seminars, reading books, watching YouTube videos and finding mentors/gurus that might help them in their search of that holy grail. They are the most active in finding ways to perfect their trading and investing style.

Risk Averse and Fearful

Since that traumatic losses, trader become Risk Averse. Unlike in the infancy stage when they are just buying in FOMO (Fear of Missing Out), this time they have this biased mindset that the price might go down if they buy. Traders will be unable to execute their setup quickly resulting to missed opportunities and more heartbreak for them.

Heartbroken

From being one of the happiest and loudest in social media, traders become quiet at this stage. Some traders might come to the point of depression. If you experience depression, I highly suggest you seek professional help to get you through this phase. Talk to your loved ones or to fellow traders so that you can release the burden of what you are feeling during this phase.

How will the Conscious Incompetence Stage end?

This is the stage where you will truly know yourself and find out if you still want to continue this path. Just like in any romantic movies, the leading couple always have their ME time or soul searching to find what is wrong with them that might have caused the break-up of their relationship. If you are AWARE what you need to improve, ACKNOWLEDGE it, put an ACTION to it, then this might be the start of the ending of this Conscious Incompetence Stage.

How to Overcome the Unconscious Incompetence Stage?

Quit searching for the holy grail. It is important that you increase your knowledge in trading but to fasten your learning curve, you must know the deeper purpose on why you pursue the craft of trading. It will always fall in your commitment to re-assess.

Re-assess yourself. Maybe you are trading against your personality or availability. Maybe there are habits that you need to change for you to be more productive. To accelerate your learning curve, first, work on the things where you can focus.

Focus. Know what you really want to achieve and grind for it. Focus on mastering one strategy at a time to start earning from the market consistently earlier than others. Know why you are using it and how it will help you in attaining your goal, in achieving mastery.

Mastery of the basics and self-mastery. These two things must come hand in hand. Grasping both will give you a good understanding on how your system works with confluence to your goals as a trader or investor.

Only traders that can find that Aha! Moment in their trading career will be able escape this stage. To find it, you must search this within yourself. Remember this quote from a famous movie; “Everyone fails at who they are supposed to be, Thor. The measure of a person, of a hero…is how well they succeed at being who they are.” (Frigga, Avengers: Endgame).

Contributor:

Full Name: Jan-Angel Echano
Investagrams username: @Soral

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About the Contributor:
A passionate trader who aims to share the reality, the HOWs and the WHYs in trading. My goal is to help traders and investors like me to continuously improve and refine our skills to the path of mastery.

Everybody takes a trip to Chinatown at least once in their trading journey. It is painful to see red numbers in your portfolio, signifying a loss, which can oftentimes really take the fun out of trading in the stock market.

If it makes you feel better, even the top traders in the world experience losing a significant amount of money if not all, before getting to where they are right now. Bouncing back from a loss isn’t an easy feat, but with hard work and dedication, it could be easy as ABCDE.

1. ACCEPT

The first step to recover from a loss is to ACCEPT that the loss is your own doing. No one else is to blame for the loss besides you. If you still blame others for the loss that you have incurred, then you are still a long way from recovering the money that you lost. This can be very hard for most people since blaming others is easier than taking responsibility for your own actions, but as they say, the first step is always the hardest.

2. BENCHING

The next step isn’t necessary, but can be very helpful to get you back in shape before you start trading again. BENCHING yourself may suck because we feel the need to immediately get back our lost funds, however this urge is going to be the next reason for yet another loss.

Take a minute to assess what went wrong last time, what you can do about it, and what actions to avoid next time. No one likes to be benched, but even the greatest NBA stars need a break. Think of this as your personal consolidation phase, you’re just charging up before you rocket back up!

3. CREATE

Just because you’re on the bench doesn’t mean you’re out for good. Take this time to CREATE a new plan before you get back in the game. Don’t just create a new plan, but think critically and assess everything that happened in the previous plan in order to create a better one.

This is also the best time to spot entry opportunities in the market where your chances of winning are higher. If you do this step correctly, you wouldn’t just make up for the money that you lost, but you will also add more to your bank!

4. DIGEST

You’ve accepted your mistake, you’ve taken your break, and you’ve created a new plan, the next big step is to DIGEST everything and look things beyond trading. You may be the family man, the breadwinner of your home,  or even the superstar of your company’s basketball team.

There is a lot more going on in your life besides your journey in the stock market, and that is why you shouldn’t let this setback affect everything else in your life, especially the ones that you are good at. Digest everything in your life and know that you are worth way more than just a single loss.

5. EXECUTE

Lastly, EXECUTE your comeback. Get back into the ball game stronger and more prepared. Stay motivated and keep your eyes on the big bucks. Keep in mind not to get greedy when green numbers come in. Stick to the game plan and trust everything will fall into place. Remember, ang bida laging talo sa simula. Same goes in trading.