Professional U.S. Stock Market Knowledge Center

Master U.S. Stock Market Fundamentals

Comprehensive guide to understanding key concepts, terminology, and mechanisms of the American stock markets. Essential knowledge for informed investment decisions.

Core Stock Market Concepts

Market Structure

  • Exchanges: NYSE, NASDAQ, and regional exchanges
  • Trading Sessions: Pre-market, regular, and after-hours trading
  • Market Participants: Retail investors, institutions, market makers
  • Order Types: Market, limit, stop-loss, and stop-limit orders
  • Clearing & Settlement: T+2 settlement cycle process

Investment Instruments

  • Common Stocks: Equity ownership with voting rights
  • Preferred Stocks: Fixed dividends, priority over common shares
  • ETFs: Exchange-Traded Funds tracking indices/sectors
  • ADRs: American Depositary Receipts for foreign stocks
  • REITs: Real Estate Investment Trusts with required dividends

Key Metrics & Analysis

  • P/E Ratio: Price-to-Earnings valuation metric
  • EPS: Earnings Per Share profitability indicator
  • Market Capitalization: Company size classification
  • Dividend Yield: Annual dividend relative to share price
  • Beta: Volatility measure relative to the market
Major U.S. Stock Market Indices
Index Description Components Significance
Dow Jones Industrial Average (DJIA) Price-weighted index of 30 large publicly-owned companies 30 blue-chip stocks Oldest U.S. market index, measures industrial sector performance
S&P 500 Market-cap-weighted index of 500 large-cap U.S. companies 500 leading companies across 11 sectors Primary benchmark for U.S. equities, represents ~80% of market cap
NASDAQ Composite Market-cap-weighted index of all stocks listed on NASDAQ Over 3,000 stocks, heavy technology weighting Technology sector benchmark, includes growth companies
Russell 2000 Market-cap-weighted index of 2,000 small-cap companies 2,000 smallest Russell 3000 companies Primary benchmark for small-cap U.S. stock performance

Essential Trading Terminology

Basic Terms

  • Bull Market: Sustained period of rising stock prices
  • Bear Market: Sustained period of falling stock prices (≥20% decline)
  • Volatility: Degree of price variation over time
  • Liquidity: Ease of buying/selling without affecting price
  • Volume: Number of shares traded during a period

Advanced Concepts

  • Short Selling: Borrowing shares to sell, hoping to buy back cheaper
  • Options: Contracts giving right to buy/sell at set price by date
  • Margin Trading: Borrowing money from broker to purchase securities
  • IPO: Initial Public Offering - company's first stock sale to public
  • Market Correction: Decline of 10% or more from recent peak