Academy · Beginner

Stock market basics

Owning a share is owning a claim on a business. Most of the vocabulary around stocks follows from that one fact.

  • ✓ 18 lessons
  • ✓ 72 minutes end to end
  • ✓ Free in MarketPro
  • ✓ No sign-up to start reading

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A share is a claim on a business, and most of the vocabulary around stocks follows from that one fact. A price to earnings ratio of 30 is not high in the abstract; it is a statement that buyers expect faster growth here than from a company trading at 12. A dividend is a transfer from the company to the shareholder, and the share price adjusts down for it on the ex dividend date, so the payment is not an addition on top of what the share was already worth.

This category covers what a share is and what ownership entitles you to, how exchanges and market makers match orders, market capitalisation, sectors and how an index is assembled from them, dividends and yields, earnings season, and the handful of ratios worth knowing.

It assumes nothing at all. It pairs with fundamental analysis for reading company numbers, and with commodities and indices if trading the whole market appeals more than picking one name.

The 18 lessons in order

  1. What Is a Stock A share is a claim on part of a real business, not a token on a screen. Here is what that claim includes, what it ranks behind… Beginner4 min
  2. How Stock Exchanges Work Exchanges sort orders by price and time and match whatever crosses. That single mechanism explains fills, slippage, halts and… Beginner4 min
  3. Common vs Preferred Stock Both classes are ownership, but they sit in different places in the payment queue, and that position decides almost everything… Beginner4 min
  4. Understanding Market Capitalization Market capitalisation compares company size in a way share price cannot. It is also silent on debt, which is where most beginner… Beginner4 min
  5. Stock Price vs Intrinsic Value Price is measured and value is estimated, which is why the two can stay a long way apart for years at a time without anyone… Intermediate4 min
  6. Dividends Explained Dividends transfer value rather than create it, which explains the ex-date price drop, the failure of dividend capture, and why… Beginner4 min
  7. Stock Splits and Reverse Splits Splits change the units, not the business. The arithmetic is neutral both ways, but the reason a company reaches for a reverse… Beginner4 min
  8. What Is an IPO The first-day pop is a pricing artefact, not a verdict. Here is who gets the offer price, who pays the open, and which dates in… Beginner4 min
  9. Bull Markets vs Bear Markets The 20% threshold is a convention. The asymmetry underneath it is not, and it explains why drawdown control outranks entry timing. Beginner4 min
  10. Reading a Stock Quote A quote describes trading conditions, not company quality. Read all twelve fields together and it tells you the spread, the… Beginner4 min
  11. Understanding the Bid-Ask Spread The spread is what you pay to transact right now. It looks trivial per trade and compounds into one of the largest costs in an… Beginner4 min
  12. Market Indices Explained Someone designed the index you are benchmarking against. The weighting method decides what the number measures, and it is rarely… Beginner4 min
  13. Sectors and Industries Sector labels describe what a company sells. The audit that matters asks what would hurt each holding, and that table is usually… Beginner4 min
  14. The P/E Ratio Explained A price-to-earnings multiple is a statement about future growth. Work out what growth it implies and the question stops being… Intermediate4 min
  15. Earnings Reports and Why They Matter Results are history by the time they are published. What moves the stock is the gap between what was expected and what… Intermediate4 min
  16. Volatility Explained Volatility measures how far a price travels, not which way. Its main practical use is deciding how large a position can be, not… Intermediate4 min
  17. Diversification Basics Diversification removes company-specific risk and leaves shared risk untouched. The arithmetic shows exactly where the benefit… Beginner4 min
  18. Growth vs Value Investing Styles Growth pays up for future earnings, value pays down for present ones. The multiple is what decides whether either bet actually… Intermediate4 min

Guided paths that use these lessons

A path is an ordered run through lessons from several categories, which is how the app sequences them. One path draws on stock market basics.

Stocks & Indices Basics

What a stock actually is, how exchanges and indices work, and the metrics behind every quote.

10 lessons
Trade · Learn · Earn

Take stock market basics with you

All 18 lessons in this category, plus the other 302 in the academy, with a quiz on each one and your place kept. Free on any MarketPro account, in the app or your browser.

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