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A single cent reflected on your electricity bill, net loss on your income statement, or even a big sack of coins given to you may give you a big wow on your face! But you may want to go back and check on the value of money you have received.

Where did it come from?

What am I supposed to do with such amount?

Is this from a legitimate source?

How am I supposed to interpret this?

A good and critical researcher of any fields must know how to measure and interpret the performance of the research topic.

The measurement and basis of the figures on everything you see must always be checked to assess the reliability of the sources and the methods performed to answer the research problems. Clarifying the construction of figures does not necessarily mean that you can never trust numbers.

It is just being well-informed on the constructed data. It’s always better to stay vigilant and know whether or the not the information is credible. Being fed with baseless data and statements can harm your knowledge on certain things. It is very dangerous wherein you are situated in a dilemma that you keep on accepting information.

Understanding the basis of data is just like mga chismis sa bayan. Saan nga ba talaga galing yang balita yan? Sino nagsabi? Paano mo naman nasabi? Numerical and qualitative fluency is a substantial yet critical skills for every investor and trader.

If you are easily swayed with the comments, opinions, and feedbacks on the stock market, you may want to consider on reflecting and going back with the initial process of gathering your data. Knowing the foundation and basis of data is not solely for the purpose of verifying and justifying the credibility of the results reflected upon charts or financial statements.

Evaluating the data can also direct you on evaluating the performance. At the same time, assessing your basis will assist you on identifying the rooms for improvement in your analysis and decision making. Also, biased and prejudiced statements are dangerous; these can lead you to poor literacy.

Understanding the market is more than performing both fundamental and technical analysis. Even countless of indicators used in reading charts are useless if you are deceived by baseless data all around the media or even among your peers.

Quantifying the value is not just about computations of your net sales, the Price-to-Earnings Ratio, checking on the last candlestick, or being informed with the 52-week low price of a stock. We just don’t want to gain money, to gain investment, or to be the top shareholders among all, we must know how can we justify the value of the money. Once we set this kind of mindset, we can build up a new discipline on accountability.

Numbers and figures can be interpreted in various ways. Metrics are difficult and challenging, but being focused on critically understanding the data will help you realize the value interpreted on customer behaviors, market structures, sustainability, profitability, the law of supply and demand, maximization of profits, and the like. The challenge in interpreting the data is also evaluating the methods selected in gathering the needed information.

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“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.

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