20 Core Terms Every Stock Beginner Must Know | Don't Be Fooled by Jargon Anymore

What is the biggest fear when entering the stock market? It’s not losing money, but not understanding what other investors are saying. Retail investors, institutional players, short squeezes, short selling… these stock market terms sound profound and mysterious, but mastering them is actually not difficult.

Quick Intro: Master these 10 terms, and you’ll understand half of it

Retail vs Big Players vs Market Makers

Retail investors are small investors like you and me, with relatively limited funds. Big players are those who operate stocks with large sums of money. What about market makers? They are institutional investors who can influence the trend of a certain stock—simply put, wealthy, powerful, and influential big players.

Bull Market vs Bear Market

A bullish market with optimistic outlook? That’s a bull market. A bearish market with bleak prospects? That’s a bear market. Remember this analogy: the bull pushes upward from below, the bear strikes downward from above.

Long vs Short

Going long means expecting the stock price to rise, so you buy; going short means expecting the stock price to fall, so you borrow stocks and sell them, then buy back at a lower price to profit from the difference. Beginners usually only go long, but experts play with short selling.

Limit Up vs Limit Down

When the stock price hits the maximum limit set by the exchange (for example, a 10% increase in Taiwan stocks), it’s called a limit up; the opposite is a limit down. This is a market protection mechanism to prevent drastic price swings.

Short Squeeze

This is a nightmare for short sellers. They expect the stock price to fall, but instead it surges, forcing them to buy back at higher prices to cover their positions, resulting in heavy losses.

Advanced Must-Know Terms: Terms used by traders

Three Major Technical Indicators

Looking at candlestick charts, moving averages, RSI indicators… these are all technical analysis. A golden cross (short-term moving average crossing above the long-term moving average) usually signals a buying opportunity; a death cross (short-term crossing below long-term) indicates a sell signal.

Support Level vs Resistance Level

If the stock price repeatedly falls to a certain level but doesn’t go lower, that’s support—like a bottom line protecting the price. Resistance is when the price repeatedly rises to a certain level but can’t break through, like hitting an invisible wall.

Getting Stuck vs Getting Unstuck

After buying, if the stock price drops and shows a loss on paper, that’s being stuck. When the stock price recovers to near the purchase price, that’s getting unstuck. Beginners fear being stuck the most, so setting stop-loss points is very important.

Four Major Fundamental Indicators

Price-to-Earnings Ratio (PE), Price-to-Book Ratio (PB), Earnings Per Share (EPS), Return on Equity (ROE)—these numbers tell you whether a company is overvalued and how profitable it is. Lower PE and higher ROE are usually more attractive.

Common pitfalls for beginners

Chasing Gains and Selling on Dips

Buying when the stock rises just because it’s going up, and selling in a panic when it drops. The result is often “buy high, sell low.” This is a psychological trap in the market.

Ignoring Risk Management

Not setting stop-loss points is like gambling. Stocks with high volatility carry greater risks, and you must know how much loss you can tolerate.

Confusing Technical and Fundamental Analysis

Technical analysis looks at trends and indicators, while fundamental analysis examines company finances and industry prospects. Relying only on trends can be manipulated by market makers, and ignoring fundamentals can lead to investing in risky stocks.

Mastering these stock market terms will help you speak confidently in investor chats, and more importantly, make more rational investment decisions. Remember: there are no absolute winners in the stock market, only investors who survive long enough.