Free Trading School · Level 13: Trading Different Markets
Trading stocks
Stocks are the most familiar market and a good place to start. Each one has its own story: earnings, products, management and sector trends. That makes them rich in opportunities and in surprises.
- Gaps: stocks often open far from the previous close after news or earnings, jumping over stops.
- Pre-market and after-hours sessions have thin volume and wide spreads.
- Liquidity varies hugely: large caps trade millions of shares a day, small caps can be illiquid.
- Sectors move together. A strong stock in a weak sector has a headwind.
| Trait | Large-cap stock | Small-cap stock |
|---|---|---|
| Liquidity | Very high | Can be low |
| Spread | Tight | Wider |
| Volatility | Moderate | High |
| Information | Widely covered | Limited |
Start with liquid large-cap stocks or ETFs, and always know when the next earnings report is.
Quick answers
Stocks are the most familiar market and a good place to start. Each one has its own story: earnings, products, management and sector trends. That makes them rich in opportunities and in surprises.
Start with liquid large-cap stocks or ETFs, and always know when the next earnings report is.
Because of gaps at the open after news. Price can open far from the prior close, filling the stop at a worse price.
Next lesson: ETFs and index trading