What the Stonk?: Stock Trading Discord Terms for Beginners
The world of stock trading might seem big, confusing, and inaccessible for the average Joe or Jane. You’ve probably seen some videos of traders sitting in front of half a dozen screens filled with graphs and charts, and you might have listened to them for a few minutes but had no idea what they were talking about.
The truth is that pretty much every amateur stock trader has been there at some point. So if that sounds like you, then you’re not alone.
Amateur traders are finding ways to break into the stock market now more than ever because information is so widely available and shared among enthusiasts and investors. One popular way that many of these beginners are getting access to the information and insight they need is through stock trading Discord servers.
Stock trading Discord servers are channels dedicated to buying and selling stocks where members can share trading insights. These stock trading Discord servers are often administered by professional traders who make their living through buying and selling, while charging a small monthly subscription fee for people who want to benefit from their experience.
If you want to try your hand at trading stocks but don’t know where to start, it can be tough to orient yourself, especially if you are not familiar with the terms that get thrown around in stock trading Discord servers.
And that’s why we are writing this article. If you are a newbie and want to be able to talk to more experienced traders and jumpstart your own stock trading, be sure to read all the way through this blog so you’ll be in the know when it comes to trading lingo.
Stock Trading Discord Terminology
We’re going to start with the very basics of investment, so if you are already familiar with some of these terms, you can go ahead and jump down the list.
Stock
Stock is a term used to represent ownership in a company. The same way you might say you have “stock” in an idea or the outcome of a project, having stock in a company means that you actually own a portion of that company, giving you a vested interest in how the company performs.
The term stock can often be used interchangeably with the next term on our list, but stock is still a more general term that describes your interest in a particular business.
Share
A share is a single unit of ownership within the stock you are holding. When a company “goes public,” they are dividing the total ownership of the company into millions, or sometimes billions, of shares, which means that a single share will often be a small fraction of a percentage of the company’s total value.
When you buy shares from a company, you are investing in that company by giving them money for a small percentage of ownership. Since a share represents a percentage, rather than a dollar amount, the value or price of the share can go up or down while the percentage stays the same.
Let’s break this down a little further using simple (but definitely not realistic) numbers to better explain this concept. Let’s say there is a company whose total worth is $1 million, and that company decides to go public and divide their business up into 100 shares. If that were to happen, each share would represent 1% ownership in the company, and in this case, each share would cost $10,000. One hundred shares at $10,000 a piece comes out to $1 million. Adds up, right?
Let’s say you buy one of these shares and hang onto it for a month, and one month after going public, the company is now worth $2 million. Now you’re still holding a share that represents one percentage point of ownership in the company, but your share is now worth $20,000.
Sounds pretty good to me! And if you happen to find a share like the one we just described, be sure to let us know where you found it!
Stock Exchange
A stock exchange is a marketplace where investors and brokers can buy, sell, and trade shares according to regulations established by governing bodies, such as the SEC (Security and Exchange Commission). Essentially, the stock exchange gives buyers and sellers a physical or virtual platform where they can do business.
Bull Market
In stock trading Discord servers, the term “bull” can be used to describe pretty much anything that is on the rise. This can refer to the market as a whole, a particular sector of the market, or an individual stock.
If a particular stock is increasing in value, it can be described as being “bullish,” but if the market as a whole is seeing significant increases, it’s called a bull market.
Most recently, we entered a bull market in October of 2022 which has continued to the time this article is being written. There are many factors that go into creating a bull market, and these same factors can just as easily create a bear market, which is the next item on our list of stock trading Discord terms.
Some of the determining factors that decide whether we are in a bear market or bull market are inflation, interest rates set by the Fed, the job market, global trading of goods and raw materials, consumer spending, and public perception. This isn’t a comprehensive list by any means, since the stock market is also affected by politics and world events, but these are a few of the major driving forces behind whether a particular company or the market as a whole is on the upswing or downswing.
Bear Market
Bear market refers to when the stock market is retreating. It’s important to understand that bear and bull markets are mostly natural occurrences that happen as the national and global economies ebb and flow. So although bull markets are usually preferred over bear markets, a bear market doesn’t necessarily mean that the economy is going to plunge into a state of despair.
Upswings and downswings can happen pretty quickly sometimes, which we have seen a lot of in recent years, and public perception has a lot to do with this. If it is widely perceived that the stock market is going to take a dive soon, many investors will pull out to avoid taking losses on their shares. This can actually drive share prices down, resulting in a declining trend, which continues to fuel a negative public perception.
But! When stock prices go down, experienced investors know that it’s time to buy because shares are cheap. So as people begin to buy back into the stock market, public perception will begin to improve, resulting in an upward trend.
Understanding how these trends work and buying accordingly is what allows investors to make money in the stock market, and it’s all too common for people to take advantage of privileged information to buy or sell in anticipation of these trends. Furthermore, there are ways in which large companies can throw their weight around to manipulate these trends for their own benefit, which brings us to the next item on our list.
The SEC
We mentioned the Securities and Exchange Commission before in passing, but it’s worth mentioning again since everything you do as an investor will ultimately be regulated by this governing body.
The SEC was created in 1934 at the height of the Great Depression to regulate security exchanges and ensure fair play. Before the SEC came about, investors and brokers were able to do pretty much whatever they wanted, allowing them to completely control the market and maximize their own profits.
However, if history has shown us anything about the stock market, it’s that investors and brokerage firms can make reckless decisions that wreak havoc on the economy, especially when they are not playing with their own money.
The SEC’s job is to mitigate some of the risks associated with investing in order to protect the general public from the repercussions of an unstable market. Whether or not the SEC is doing a good job at this is a matter of debate, but we won’t get into that here.
Long Position
When an investor talks about a long position, this means that they’re buying a stock that they believe will increase in value. Sometimes a long position will involve hanging onto stock for an extended period of time, then cashing it out to take profits somewhere down the road. A long position on a stock can also refer to when an investor buys a stock at one price, then sells the stock once it has increased by a certain percentage or dollar amount.
A “long” position does not necessarily mean that the investor will be hanging onto the stock for a “long” time; it simply means that the investor hopes to make money by acquiring stock that they believe will increase in value.
Short Position
You’ve probably heard of investors “shorting” stocks, and this is basically the opposite approach in comparison to taking a long position, but shorting is significantly more complicated than taking a long position.
When someone shorts a stock, that means they are hoping to make money on a stock when it decreases in value. This is accomplished by selling a borrowed stock at a high price, then buying it back at a lower price and keeping the difference.
So let’s say I loan you a stock that is worth $10, but you think that stock will be worth $2 tomorrow. You take the borrowed stock and sell it for its current value of $10, and tomorrow, your predictions come true, allowing you to buy back the stock for $2 and return it to me. So in this example, you would have made a net profit of $8 on this shorted stock.
Shorting stock can be extremely lucrative when done successfully, and a famous example of this is when a group of investors shorted the housing market before the crash in 2008. These investors made boatloads of cash off this short, and they even made a movie about it.
However, it’s important to note that short selling is significantly more risky than going long, and it comes with additional fees that you would not have to pay when taking a long position.
Ask, Bid, and Spread
The ask for a stock is the lowest price that a seller is willing to take for their stock at a particular point in time. A seller’s ask today could be completely different than their ask tomorrow.
A buyer’s bid price is the maximum amount they are willing to pay for a certain number of shares. So a buyer might put out a bid saying they are willing to pay $100 for 10 shares, and if there is a seller whose ask matches the bid, then they can make a deal. But finding a perfect match is rarely the case, and this is where the spread comes in.
The spread is the difference between these two dollar amounts, and it’s basically the middle ground where negotiations will have to take place for a sale to happen. So if you’re bidding $10 a share, and I am asking $15, then there is a $5 spread. In order for us to make a deal, we’ll need to meet somewhere in the middle.
There are just some of the basic terms you will undoubtedly need to know when you jump into a stock trading Discord server, but there are tons more you will come across as you get deeper into the world of trading.
Stock Dads™ on Discord
If you’re looking for the perfect stock trading Discord server to help you get started with your investment goals, take a minute to check out Stock Dads™. For less than what it costs to keep your kids watching cartoons every month, you could be getting access to expert trading insights to help you start making moves in the market.
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When you sign up for our stock trading Discord subscription, you’ll also get exclusive access to our library of training materials, e-books, and a personal investing mentor to help you get started. With all of these resources, you’ll be able to quickly set up an account, familiarize yourself with the terms and lingo of the industry, and get trading in no time!
Ready to start investing and trading with confidence? Join Stock Dads™ on Discord today and take the first step toward mastering the stock market