LemonTrades
TL;DR
- A stock is a piece of ownership in a company. One piece is called a share.
- Investors make money when the share price rises and when the company pays a dividend. They can lose money too, up to everything they put in.
- A single stock is riskier than a fund holding hundreds of them, so many beginners start with a fund.
- LemonTrades tells you what moved the stocks you follow, and why, as it happens.
“Stock” sounds complicated, but the idea is simple: you’re buying a small slice of a business.
What is a stock?
A stock, also called equity, is ownership in a company. If a company has 1 billion shares and you own 1,000, you own one-millionth of it: a claim on its profits and, usually, a vote at its annual meeting. “Stock” is the general word, and “shares” are the units you buy.
Why companies sell stock
To raise money without borrowing. A company sells shares to the public for the first time in an initial public offering (IPO), and uses the money to grow. After that, investors trade the shares with each other. See how the stock market works.
Common vs preferred stock
| Common stock | Preferred stock | |
|---|---|---|
| Who buys it | Most investors | Mostly institutions and income investors |
| Votes | Usually yes | Usually no |
| Dividends | Can change or stop | Usually fixed, and paid first |
| If the company fails | Paid last, often nothing | Paid before common |
How you make money from stocks
- The price rises. Buy at $100 and sell at $150, and you’ve made $50 a share.
- Dividends. Some companies pay part of their profits to shareholders. See Nvidia’s dividend; others, like Amazon, pay none.
What can go wrong
- Prices fall. Big companies can drop 10% in a day; on November 5, 2026, Nvidia fell 9.3%. See is the market crashing?.
- Companies fail. If a company goes bankrupt, its stock can go to zero.
- Too much in one stock. That’s why many investors own a fund that holds hundreds. See what is an ETF?.
How to buy a stock
- Open a brokerage account, or an IRA for retirement money.
- Add money from your bank.
- Search for the company’s ticker, like NVDA for Nvidia.
- Choose a dollar amount or number of shares and place the order.
The steps in detail: how to buy Nvidia stock. Why prices move: how are stock prices determined?.
Sources
Education, not financial advice. See our disclaimer.
