Open refers to the time that trading begins on an exchange. The New York Stock Exchange opens at 9:30 AM EST, although pre-market trading typically begins at 8:00 AM EST (but can begin earlier).

A penny stock also known as an over-the-counter (OTC) or micro-cap stock, is a stock initially trading at less than $5, and represents a share in one of the smallest companies trading on the stock market. Penny stocks are frequently associated with low market capitalizations, which make them much more susceptible to price manipulation and “pump-and-dump schemes”. 

An IPO, or Initial Public Offering, also known as, “going public”, is when a company first offers the public the opportunity to purchase shares in it. Prior to an IPO, a company is usually solely owned by a few private investors who invested capital to start the company.

Many companies, particularly larger ones, pay dividends. Typically paid quarterly or annually, it is a method for companies to reward their shareholders for continuing to hold stock in their company. Notably, large technology companies often do not pay dividends, opting instead to reinvest that money into research. 

Day trading is the practice of buying and selling some security all within one trading day (between market opening and market closing). Day traders are speculators, because they attempt to profit off of fluctuations in the price of some security, rather than subscribing to a buy-and-hold strategy that relies on real growth by a company.

Close refers to the time that trading ends on an exchange. The New York Stock Exchange closes at 4:00 PM EST, although after-hours trading continues until 8:00 PM EST.

Market liquidity represents how easily an individual can make a trade within some market (usually the stock market) at stable and transparent prices. Liquid markets are characterized by a high trading volume with no substantial imbalance between the number of buyers and sellers. The stock market is generally considered to have a high market liquidity.

Note: For the liquidity of a specific market, please see “Market Liquidity“

Liquidity is the ease with which some asset can be converted to cash (the most liquid asset). For example, an individual can usually sell some stock and convert it to cash with ease, so stocks are relatively liquid. However, to sell a house and convert it to cash is a lengthy and complicated process, so a house is relatively illiquid. 

The bid-ask spread is the difference between the price the buyer is willing to pay and the price the seller is willing to accept for some number of shares of a security. For example, if the average bid for stock $XYZ is $5.25, and the average ask is $5.75, then the spread is $5.75 – $5.25 = $0.50. Bid-ask spread is a strong indicator of market liquidity, such that a lower spread indicates higher liquidity.

Blue chip stocks represent large, well-established, and stable companies. They have strong reputations, dominate their industries, and tend to have market capitalizations of several billion dollars. The Dow Jones Industrial Average is composed of blue chip stocks.