Stock Market Frequently Asked Questions

What triggers a market-wide circuit breaker?

How long does a circuit breaker halt last?

What is Limit Up-Limit Down (LULD)?

Do circuit breakers stop a stock from falling?

When was the last time a market-wide circuit breaker was triggered?

Why did circuit breakers get created?

What time does the U.S. stock market open and close?

Can I trade stocks before 9:30 a.m.?

Is after-hours trading riskier than regular trading?

Why do stocks move so much after earnings are released after market close?

Are U.S. markets open on weekends?

Do all brokers offer extended-hours trading?

What is a good dividend yield?

Why did a stock's dividend yield go up without a dividend increase?

What is a dividend yield trap?

What is a payout ratio?

What is dividend growth investing?

Why do utility and REIT stocks often have higher dividend yields?

What does high trading volume mean for a stock?

Is high volume always bullish?

What is volume divergence?

What is a good way to judge whether volume is 'high' for a stock?

What is On-Balance Volume (OBV)?

Does low volume always mean a stock is less reliable?

What does a beta of 1.5 mean?

Is a high-beta stock always riskier?

Can beta be negative?

How is beta calculated?

Does a low beta mean a stock is a safe investment?

Why do different websites show different beta values for the same stock?

What is the Capital Asset Pricing Model?

What is a good ROA?

What is the difference between ROA and ROE?

How is ROA calculated?

Can ROA be negative?

Why shouldn't I compare ROA across different industries?

Why do banks have such low ROA figures?

Does a high ROA always mean a company is well-managed?

What is the difference between treasury shares and retired shares?

Do treasury shares get dividends?

Why do companies buy back their own stock?

How do treasury shares affect earnings per share?

Can a company resell its treasury shares?

Are buybacks better than dividends for shareholders?

How are treasury shares recorded on a balance sheet?

What is the difference between float and outstanding shares?

Why does a low float make a stock riskier?

Does a share buyback affect float?

What happens to float after an IPO lock-up period ends?

Where can I find a stock's float?

What is considered a low-float stock?

How does float relate to short squeezes?

What is the difference between developed and emerging markets?

What is an ADR?

Does currency risk mean international stocks are always riskier?

How much of a portfolio should be in international stocks?

What's the easiest way to invest internationally?

Are foreign dividends taxed differently than U.S. dividends?

What is a currency-hedged international fund?

What counts as a large-cap stock?

Are large-cap stocks safer than small-cap stocks?

Do large-cap stocks pay dividends?

Is the S&P 500 all large-cap stocks?

Are large-cap stocks good for beginners?

Can a large-cap company fall out of the large-cap category?

What's the difference between large-cap and mega-cap?

What counts as a mid-cap stock?

Are mid-cap stocks safer than small-cap stocks?

Is mid-cap or large-cap better for long-term investing?

Can a mid-cap stock become a large-cap stock?

What's the easiest way to invest in mid-cap stocks?

Why are mid-cap companies common acquisition targets?

Do mid-cap stocks get much analyst coverage?

What counts as a small-cap stock?

Are small-cap stocks riskier than large-cap stocks?

Do small-cap stocks pay dividends?

Is it better to buy individual small-cap stocks or a small-cap fund?

What's the difference between small-cap and micro-cap stocks?

Why do small-cap stocks sometimes get less attention from analysts?

Can a small-cap stock become a large-cap stock?

What is the biggest risk management mistake new investors make?

Should I use stop-loss orders to manage risk?

How much of my portfolio should be in one stock?

Is it possible to eliminate investment risk entirely?

What's the difference between issued shares and outstanding shares?

How does a stock buyback affect outstanding shares?

Why do companies report both basic and diluted shares outstanding?

Where can I find a company's current outstanding share count?

Is contrarian investing the same as value investing?

How do you know when a stock is a genuine contrarian opportunity versus a value trap?

Why is contrarian investing psychologically difficult?

Can contrarian investing be applied to entire sectors, not just individual stocks?

What does it mean when a stock touches the upper Bollinger Band?

What is a Bollinger Band squeeze?

What settings do Bollinger Bands use by default?

Can Bollinger Bands be used alone to trade stocks?

Can regular investors see a stock's order book?

Why does my market order sometimes execute at a worse price than expected?

What happens to an order that never gets matched?

Is the order book the same on every exchange?

Do I need a minimum number of shares to be considered a shareholder?

What's the difference between a shareholder and a stakeholder?

Can a shareholder lose more money than they invested?

What is a majority shareholder?

What is considered a good ROE?

Why can ROE be misleading for heavily indebted companies?

What's the difference between ROE and ROA?

Can ROE be negative?

What is a good portfolio allocation for a beginner?

How often should I rebalance my portfolio?

Should 100% of my portfolio be in stocks?

What's the difference between allocation and diversification?

What does a MACD crossover mean?

What is the MACD histogram?

Is MACD a leading or lagging indicator?

How is MACD different from RSI?

Does MACD work well on all stocks?

What are examples of defensive stocks?

Are defensive stocks recession-proof?

Do defensive stocks pay dividends?

What's the opposite of a defensive stock?

Should a portfolio hold only defensive stocks?

Can individual investors realistically beat the market through active investing?

Are actively managed mutual funds worth the higher fees?

What skills does active investing actually require?

Is active investing the same as day trading?

Do I have to vote my shares?

How many votes does one share of stock get?

Can I vote if I own stock through a mutual fund or ETF?

What happens if a shareholder vote is close?

What does RSI above 70 mean?

What is RSI divergence?

What's the best RSI period to use?

Can RSI be used alone to trade stocks?

Is RSI the same as MACD?

Is passive investing the same as index investing?

Does passive investing mean I never check my portfolio?

Can passive investing lose money?

Why has passive investing grown so popular?

Why do investors prefer free cash flow over net income?

Can a profitable company have negative free cash flow?

What is free cash flow used for?

How does free cash flow relate to enterprise value?

What are examples of cyclical stocks?

Are cyclical stocks riskier than defensive stocks?

When do cyclical stocks perform best?

Why can cyclical stocks look cheap right before a downturn?

What's the opposite of a cyclical stock?

Why did I pay more than the last traded price when I bought a stock?

Does a wide spread mean a stock is risky?

Can I avoid paying the spread?

Is the spread the same as a broker commission?

Does the spread matter for long-term investors?

Do share buybacks always increase the stock price?

What is a stock's float?

Why do stock prices drop after an IPO lockup expires?

Is demand the same as trading volume?

What is the main difference between a public and private company?

Why would a company choose to stay private?

How do employees at private companies get paid in equity?

What happens to outstanding shares when a company goes public?

What's the difference between net income and revenue?

Why do companies sometimes report positive net income but negative cash flow?

What is net profit margin and why does it matter?

Can net income be manipulated?

Is a 50-day or 200-day moving average better?

What's the difference between SMA and EMA?

Is a golden cross a reliable buy signal?

Why do moving averages fail in sideways markets?

Which moving average period should beginners start with?

What was the GameStop meme stock event?

Is it possible to profit from meme stocks?

What is a short squeeze?

How are meme stocks different from penny stocks?

Should beginners trade meme stocks?

Is index investing the same as passive investing?

Which index should a beginner choose?

Do index funds ever underperform actively managed funds?

Can I lose money with an index fund?

How many points do I need to draw a valid trend line?

Should I connect candle wicks or bodies for a trend line?

What happens when a trend line breaks?

Are trend lines more reliable on longer timeframes?

Are stock certificates still legally valid proof of ownership?

Can I still request a paper stock certificate today?

How do I find out if an old stock certificate is worth anything?

Is it risky to hold a physical stock certificate instead of an electronic record?

Is revenue the same as profit?

Why do investors care about revenue growth specifically?

What's the difference between revenue and cash flow?

Can a company have revenue but no profit?

Are penny stocks illegal?

Can you actually make money on penny stocks?

What's the difference between penny stocks and small-cap stocks?

Why do penny stocks get hyped on social media?

How is a penny stock different from a meme stock?

Is momentum investing the same as day trading?

Why does momentum work if markets are supposed to be efficient?

What's the biggest risk in momentum investing?

Can momentum investing be combined with value investing?

How long counts as long-term investing?

Is long-term investing safer than short-term trading?

What should I do during a market crash if I'm a long-term investor?

Does long-term investing mean I should never check my portfolio?

Why does a stock price change even when there's no news?

Why do stocks drop after good earnings sometimes?

Does trading volume affect how much a price moves?

Who actually sets a stock's price?

How exact should a support or resistance level be?

What confirms a real breakout versus a false one?

Do support and resistance levels work on all timeframes?

Why do stocks bounce off round numbers like $100?

Is Nasdaq only for technology stocks?

Which is bigger, the NYSE or Nasdaq?

Does Nasdaq have market makers like a designated specialist?

Can a company move from Nasdaq to the NYSE or vice versa?

What is the Nasdaq Composite?

Do fractional shares pay dividends?

Can I vote with a fractional share?

What happens to fractional shares if I transfer brokerages?

Are fractional shares riskier than whole shares?

What is the best first stock to buy?

How many shares should I buy my first time?

What order type should a beginner use?

Is it normal to feel nervous about your first stock purchase?

What's the difference between basic and diluted EPS?

Can a company increase EPS without improving its business?

Is a higher EPS always better than a lower one?

How does EPS relate to the P/E ratio?

What's a good dividend yield to look for?

Are dividend stocks safer than growth stocks?

Should I reinvest dividends automatically?

How is dividend investing taxed?

What makes a stock a blue chip?

Are blue-chip stocks a safe investment?

Do blue-chip stocks pay dividends?

Can a blue-chip stock stop being a blue chip?

Are blue-chip stocks good for beginners?

Is a P/B ratio below 1 always a good buying opportunity?

Why do tech companies usually have high P/B ratios?

How is P/B different from P/E?

Does P/B work well for every industry?

Is preferred stock safer than common stock?

Why don't preferred shares have voting rights?

What does 'callable' mean for preferred stock?

Can preferred stock lose value like common stock?

What is the difference between cumulative and non-cumulative preferred stock?

Is the NYSE floor still used for real trading?

What's the difference between the NYSE and Nasdaq?

How old is the NYSE?

Can smaller companies list on the NYSE?

What does a designated market maker actually do all day?

Can I really start investing with just $1?

Is $1,000 enough to start investing in stocks?

Should I pay off debt before investing?

How much should a beginner invest per month?

Is growth investing riskier than value investing?

What metrics matter most in growth investing?

Can a stock be both a growth stock and a value stock?

Do growth stocks pay dividends?

Can a company cut its dividend?

What are Dividend Aristocrats?

Should beginners focus on dividend stocks?

What is the most reliable candlestick pattern?

What does a doji candle mean?

How many candles should I look at to judge a trend?

Are candlestick charts better than line charts?

Is a value stock always a good buy just because it's cheap?

Do value stocks pay dividends?

How do you find value stocks?

Are value stocks safer than growth stocks?

What's the difference between value stocks and blue-chip stocks?

What's the difference between value investing and just buying cheap stocks?

How do you calculate a stock's intrinsic value?

Is value investing still relevant given how much markets have changed?

How do I avoid falling into a value trap?

Does technical analysis actually work?

What's the difference between technical and fundamental analysis?

Do I need technical analysis to invest successfully?

What's the best technical indicator for beginners?

Can technical analysis predict a crash?

What is considered a 'good' P/E ratio?

Why do some profitable companies have no P/E ratio listed?

Is a low P/E always a sign of a cheap, undervalued stock?

How does P/E relate to EPS?

How much money do I need to open a brokerage account?

Is it safe to open a brokerage account online?

Can I have more than one brokerage account?

How long does it take to open a brokerage account?

Do stock exchanges own the companies listed on them?

How many stock exchanges are there in the U.S.?

What happens if a company gets delisted?

Are all trades matched instantly?

Is common stock riskier than preferred stock?

Do all common shares come with voting rights?

How do I know if a stock I'm buying is common or preferred?

Can a company have only common stock and no preferred?

What happens to my common stock during a stock split?

Is the stock market the same as the New York Stock Exchange?

Who decides stock prices?

Can anyone buy stocks?

What's the difference between the stock market and the economy?

Is a stock the same thing as a share?

Can a stock's price go to zero?

Do I need a lot of money to buy stock?

What's the difference between stocks and bonds?

Can I sell a stock the same day I bought it?

How long does it take to get money after selling a stock?

Is there a fee to sell stocks?

Should I sell a stock that's losing money?

Are growth stocks riskier than the average stock?

What's a good example of a growth stock?

How is a growth stock different from a meme stock?

Should beginners buy individual growth stocks?

Is fundamental analysis better than technical analysis?

How long does a basic fundamental analysis take?

Can fundamental analysis predict short-term price moves?

What's the single most important fundamental metric?

Do I need accounting knowledge to do fundamental analysis?

Why not just use market cap to compare companies?

Can enterprise value be negative?

Is enterprise value more useful for some industries than others?

How is enterprise value different from market capitalization?

Is buy and hold the same as passive investing?

How long do you need to hold a stock for this to count as buy and hold?

Does buy and hold mean never selling?

What's the biggest mistake buy-and-hold investors make?

How many stocks should a beginner portfolio have?

Is it bad to have too much money in one stock?

Do I need bonds in a stock portfolio?

What's the single most common mistake new investors make?

Is it a mistake to check my portfolio every day?

How do I avoid emotional investing decisions?

Should beginners avoid high-risk stocks entirely?

What percentage of a portfolio should be high-risk stocks?

Does a low stock price mean lower risk?

How long is 'long-term' in stock investing?

Should I buy individual stocks or an index fund for the long term?

Do long-term stocks need to pay dividends?

Is it safe to buy stocks online?

What's the difference between a market order and a limit order?

How long does it take for a stock purchase to complete?

Is a higher market cap always better?

Can market cap change without the company doing anything?

What's the difference between market cap and enterprise value?

What's the single most important number when analyzing a stock?

Where can I find a company's financial data for free?

How long should stock analysis take?

Do I have to pay taxes on dividends I reinvest?

Which is better for beginners, growth or value stocks?

Can a stock be both growth and value?

Should beginners buy individual stocks or ETFs?

Are cheap stocks better for beginners because you can buy more shares?

How many stocks should a beginner own?

How much money do I need to start investing in stocks?

Is it better to invest in individual stocks or index funds as a beginner?

What's the biggest mistake new investors make?

How many stocks do I need to be diversified?

Can you be too diversified?

Does diversification protect against a market crash?

Is an index fund automatically diversified?

Is dollar-cost averaging better than investing a lump sum?

How often should I dollar-cost average?

Can dollar-cost averaging lose money?

Do I need a lot of money to dollar-cost average?