There are terms that we often hear on the news or read on news articles that has something to do with the stock market. Although we often encounter these jargons, we may still have difficulty in determining the meanings of these. But thanks to books like stock market for dummies, which may also referred to as stock investing for dummies, understanding these terms have become a relatively easy thing to do.

The words below are some of the most commonly used terms in the stock market industry. Although some of us are already knowledgeable of these jargons, many people have only vague definitions of these terms; therefore, it is important to learn the exact meanings of these rather basic stock market terms.

• Share – refers to the portion of the company’s stock, basically a small part, in which the company’s stock is divided.
• Stock – refers to the total quantity of shares issued by a company or corporation. Specifically, it refers to the smallest unit of ownership of a company.
• Shareholder – also referred to as stockholder, it refers to an individual who owns one or more shares of the company’s stocks.
• Stockbroker – refers to the person who buys and sells stocks, shares, and other securities for the clients
• Ask – in stock market for dummies guide, it refers to the lowest value of a stock that the seller will accept in selling the stock
• Bid –refers to the highest value of a stock that the buyer is willing to pay
• Bear – is an individual who thinks that the stock market is slowing down
• Bull – is an individual who thinks that the stock market is thriving
• Blue Chip – in stock trading for dummies books, it refers to a high-profile company that has a track record of strong revenues and profits.

Aside from these basic terms, there are many more common terms in the stock market for dummies. Furthermore, you can also find more helpful tips regarding investing and other important things involving the stock market. Indeed, a stock market for dummies reference guide is very helpful for future investors and ordinary people alike. What are you waiting for? Get a jump start and start investing today!

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What exactly is a cheap stock? Cheap doesn’t just mean that the trading price of the stock is cheap. That is criteria we will look at, but not the only one. Stocks valued at $100 or $200 can be called cheap if they meet certain conditions. You could even call Berkshire Hathaway cheap last year when it fell from a high of $140,000 a share down to about $75,000 a share in 2009. It has since rallied to over $120,000 a share since. Why would have been deemed cheap? The underlying businesses that make up Berkshire Hathaway were still fundamentally sound and throwing off cash. The stock tanked due to investors being afraid of the economic situation last year.

So that is one thing we are looking for. Stocks that are in good shape whose share prices are taken down, but the business is still good and profitable. It’s tough to invest in a scenario like that, buying when everything looks bleak, but if you are able to, you can make a lot of money. Warren Buffett has said he likes to be greedy when others are fearful and fearful when others are greedy.

Let’s use Warren Buffett for another example. Early in his investment career, he found a stock trading for about $45 a share. This was back in the early 1960”s and $45 a share was a lot of money then. Just based on the trading price of the stock, you might have concluded it wasn’t cheap. What Buffett would do is to closely exam the assets of companies. He discovered this $45 stock had over $65 a share in cash and liquid investments! Imagine buying something worth $65 for $45. That would be a classic example of finding a cheap stock.

These are just 2 examples of looking for the best cheap stocks. They are out there, its up to you to research and uncover them.

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Here are the other five things to know when shorting stocks.

6. Margin Calls – This is probably the scariest thing about owning a short position in any company.If the stock you’ve decided to short moves in the wrong way (stock price rises), your broker will insist that you do one of two things. One, deposit more money into your account, enough to cover the purchase price of the stock at the current price. The other choice is that your broker will insist that you sell some of your long positions to cover the margin call or they will do it for you in their own way.

7. Early Sale – If the original owner of the shares that you borrowed decides to that they want to sell the stock, you must replace it — either by finding other shares through your broker or buying it on the open market. Remember all you did originally was “borrow” the shares.

8. Short Squeeze – If you’re new to the stock market then this is a term that you might not be familiar with. It’s a term that is used quite often on Wall Street. A short squeeze is when the price of the stock jumps up in value quickly, causing short traders to “cover” their positions. Which means that they have to buy shares to cover the ones that they borrowed. This typically causes higher prices, which prompts more people to sell and to take profits. This is something that you may never want to get caught in the middle of because of the ferocity of the situation as well as get quite expensive.

9. Properly Covering You Position – You may not even realize it, but you can have a short and a long position at the same time. When you go to “cover” your short position, you need to tell your broker clearly that the shares you’re buying are to cover your short position. If you just buy the share while still having a short position, you’ll have conflicting positions. Many times people are in a rush to cover their position, that they may not even realize their mistake of overlooking their selection, especially online traders.

10. Dividends And Taxes – If you have borrowed and shorted a dividend-paying stock, you will receive the dividends, but you, in turn, must pay the original owner the value of those dividends. Also, should you hold a short position for more than one year, well, tough luck — the IRS still treats capital gains as short-term gains. Ah, Uncle Sam is always reliable!

I hope these ten things I’ve given to you will help you in your trading. If you are new to the stock market, then it’s wise to stay away from shorting stocks until you learned more of the basics.

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One strategy that I use and I do use it quite a bit is referred to as channel trading. It’s help me many times in the past as well as made me plenty of money. It takes a while to really be able to do it, but it’s relatively easy. What is channel trading? It’s a technique that deals with a particular stock that a trader has been watching, where the price of the stock stays within a average range.

Stock prices do trade within a range that is typical to the value of the company. Let’s say that stock “XYZ” has been trading within the price range of $20 per share to $28 per share. When the price is down around the twenty dollar area you start building a position as the price of the stock gets over the twenty-seven dollar range you start getting ready to dump the shares.

Take into consideration that this is not a perfect system. There might be times that the stock will drop below the low range as well as the company having strong fundamental and a good balance sheet will push the price into a new range and you will have to start studying to figure out the new range. Sometimes profit-takers will sell off their position a little early because of fear within the markets.

If you look around you can find some good stocks that trade over a $20-$30 range. Of course most of those have a higher price tag (over $120 per share). Take your time and you will find many that will work great for you, but remember this is not an exact science. Before investing in any company, you must do your due diligence. As I always say, research is the key to successful stock trading. If you take your time and check out a good stock market site, you’ll save yourself headaches later on.

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During the time that I was working full-time, I didn’t have time to sit and watch the tickers during the day’s trading hours. I would sit home at night and catch up on the day’s news and do research on the stocks that I was interested in buying. If there were stocks that I decided to buy, I would set up a limit buy order, which was typically lower than the stock’s closing price. The next day after work I would come home to see how my trades went.

After I stopped working for someone else, I started spending more time during the day tracking the activities of the day’s events on Wall Street. I would be able to keep closer tabs on what was going on and react when I thought the time was right and the opportunity was good. I also started to take Jim Cramer, and his stock investing tips, more seriously.

I started to notice that my gains weren’t as good as they were when I was working. I wondered what was the problem. I took a little while for me to realize I had changed my trading strategy, without meaning to.  Since I was able to watch the stock market more closely, I was also exposed to the constant fluctuation of the share prices.

For example, let’s say I was researching stock XYZ  and it had a share price at the close of the day of $20.65. I would set the limit order to buy at $20 per share. Since I was at work I never really saw how the price reacted throughout the day. Once the price dropped to my target, the sale would trigger at the point and I would have my shares at the desired price.

When I was home and watching throughout the day, I started to react to the minute by minute moves. Let’s use the same example of stock XYZ. If the price opened up at $21.05 and then for the first hour or so of trading it moved up to $21.35, I would think that others had seen the same good numbers on XYZ and were buying up as quick as possible. I would set a limit order at $21.25 just to grab it a little lower than where it was. Wouldn’t you know that after the stock climbed, it started to descend. It would go down below where it closed the day before and in some cases, go below the original limit order price of $20 per share.

What I was doing is what I refer to as chasing a stock. Chasing a stock will do nothing for you but make you lose profits and wait longer for a turn-a-run after you’re in the hole by a couple of percentage points. Granted, the stock I would get into would go up well above the $25 dollar range and I would still make a profit, but like I said earlier, my profits weren’t as big as before.

If you want to be successful in stock trading, you need to understand your actions first. Many people don’t realize that the individual’s emotional state will totally effect the profitability of your portfolio.

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In my travels I have found many phony programs and other types of investor “clubs” that leave something to be desired. I have also found quite a few places where, after years of being involved with, I still keep coming back for more because I find the information to be honest and straight-forward. One of those places where I’ve been going to for research and knowledge is Jim Cramer from CNBC’s Mad Money. He is also the Chairman for the web site TheStreet.com, a site dedicated to the stock market and one that I visit a couple of times a day.

I first started watching him in 2005. I found his show to be more entertaining than informative, but after awhile I realized that the show was purposely geared to make stock trading entertaining.
During the first two years that I watched his show I increased my portfolio by leaps and bounds. The man knows his stuff.

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For over 10 years Jim Cramer was a successful hedge fund manager and now he writes for RealMoney.com. Over the years he has developed a strict set of investing disciplines that have helped all kinds of people be successful through any market.

If you asked any average investor out there between the years of 2005-2007, they would say the man is a great source of information and that they made money from his insight. In the last year though there are people out there that don’t know the intricacies of the show and say that they’ve lost money from his recommendations. If you watch the show you would know that he even says that you should not buy stocks on his recommendations until you have done the research to see if the investment is right for you. It also doesn’t help that since October 2007 the stock market has been correcting itself as well as dealing with all the deception that the financial sector had been up to.

Through it all, Jim Cramer has given me some great insight into the stock market through a service he created Action Alerts PLUS, which allows people to follow along as he makes his own trades. Managing money with an open hand is hard. But, Jim Cramer is so committed to helping people learn that he created a charitable trust portfolio to show investors how and why he makes trades.

In Action Alerts Plus, you’ll have the ability to see what Jim Cramer recommends for the trust fund and get to trade along side him. You’ll get e-mails a couple of times a day from him depending on what is going on in the markets. He doesn’t buy or sell any stock without sending you an e-mail first and he will give you his reasons for the action that he’s taken. You also get to look at his portfolio as he buys and sells stocks.

In the time that I’ve been a member of Action Alerts Plus, I’ve gotten insight to why the markets have been taking a beaten and how to avoid losing any more money in the process. In most cases, I’ve made money as the stock market corrected itself.

I suggest giving the program a try and seeing for yourself what you think of it. Click the banner below, or in our sidebar, subscribe for a free two week trial and get a free look at Jim Cramer’s Action Alerts Plus Portfolio.

During your free two weeks, you’ll have the same exact access that all the paying members get, such as;

1. Daily e-mails that will inform you of what he planning on buying or selling and his reason for it.
2. Full access to his stock portfolio which will show you which stocks he holds, what his cost basis is, when he first bought into the stock, when his last transaction was and what his gains and losses are for each stock holding.
3. Jim Cramer’s 25 Rules of Investing.
4. Jim Cramer’s 10 Commandments of Trading.

After the two week free trial period, you have the option to sign up or cancel. If you sign up, you can pay monthly or annually.

Jim Cramer has enlightened and educated me in many aspects of the stock market and I know he can do the same for you. Try it free for two weeks and let me know what you think.

Reader Question: Do you watch Mad Money or read The Street website? What’s your opinion on it? Are you, or have you ever been a member of Action Alert Plus, and if so, what was your experience?

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