The stock market is not just one market. When the news refers to the stock market, they typically mean the DOW (Dow Jones Industrial Average), but there are actually several different markets. I won’t list them all, but to name a few. NASDAQ (National Association of Securities Dealers Automated Quotation), S&P 500 (Standard and Poors 500), NYSE (New York Stock Exchange) and the NYMEX (New York Mercantile Exchange).

Stock is a share (piece of the company) unit of ownership. There are two different types of stocks within a company. There are preferred and common stocks. Preferred stocks carries a little more weight in regards to dividends, but not when it comes to voting rights. The preferred shares will receive any payouts before the commons in any bankruptcy issues. In bankruptcy, the commons share are the last to get paid and in most cases, never do.

There are different sectors within the stock market. Each sector represents the different industries in the world. Agricultural,  Basic Materials, Commodities, Financial and Energy are just a few of the many sectors. Each one effects another depending on what is going on in the world.

ETF’s and Mutual Funds are a different way to play the stock market. Instead of buying individual stocks of a company, you can purchase into an ETF’s or mutual fund which buys into several companies in one particular sector. The idea is that typically you don’t have to know exactly which stock to own, but to just focus on the sector. This is a good way for beginners to learn how to trade without taking too much of a chance.

In later posts I will go over many of the other things that you would need to know to benefit from trading stocks in the stock market.