Newcomers to the stock market are often "deterred" by various professional terms, mainly due to three common issues: first, they cannot understand market information, feeling confused by terms like "market index, margin trading, stop-loss"; second, they are afraid to place orders easily, having only a vague understanding of rules such as "limit orders, market orders, T+1 settlement"; third,This analysis report might as well be written in hieroglyphics - financial jargon like EPS, ROE, and RSI is totally unintelligible.. This article will thoroughly explain over 100 stock terms at once, helping you grow from a "stock market novice" to an investor who can "understand the market." The article is structured in the logic of "basics → trading → analysis → practice," and it is recommended to save it for step-by-step learning.

I. Stock Basics for Beginners

1. What is a Stock? Understanding the Nature and Operation Mechanism of Stocks

When you first hear about "buying stocks," have you ever asked: "What does a stock mean?" Simply put, a stock is an ownership certificate issued by a company. When you buy shares of a company, you become one of its shareholders.

For example: Suppose a company has a total of 10,000 shares, and you buy 100 shares. Then you are a 0.1% owner of the company. As a shareholder, you can:

• Share in the company's profits (through dividends)
• Participate in voting at shareholder meetings
• Enjoy capital gains from rising stock prices

2. Why Invest in Stocks? 5 Advantages to End Your Hesitation

Many people save money in banks, but the interest rate is far lower than inflation. In the long run, stocks are one of the most effective tools to combat inflation and achieve wealth growth.

5 Advantages of Investing in Stocks:

3. Must-Know Before Investing: Basic Market Concepts

II. Detailed Explanation of Trading Rules and Hours

1. Comparison of Trading Hours and Rules for Taiwan Stocks, US Stocks, and Malaysian Stocks (with Table)

Different markets have significant differences in trading hours, price limits, and settlement systems. Beginners must understand these!

📊 Overview of Trading Rules for Major Global Stock Markets：

2. Stock Order Types: How to Choose Between Limit Orders, Market Orders, and Stop Orders?

3. Settlement Systems: What Exactly Are T+2 and T+1?

• Day T：The day you buy or sell stocks
• T+2：Taiwanese and Malaysian stocks require settlement (payment or receipt) on the 2nd trading day after the transaction
• T+1：US stocks switched to T+1 from May 2024 for faster settlement

⚠️ Failure to make payment on time will constitute default settlement, affecting your credit record!

III. In-depth Analysis of Fundamental Analysis Terms

1. What Are EPS, P/E Ratio, and ROE? Understand Core Financial Indicators in One Article

1.1 Earnings Per Share (EPS): The "Report Card" of a Company's Profitability

EPS = Net Profit After Tax ÷ Number of Outstanding Shares

✅ Example: A company earns 100 million yuan annually with a total share capital of 100 million shares → EPS = 1 yuan

📈 A higher EPS indicates stronger profitability, but it needs to be compared with peers.

1.2 Price-to-Earnings Ratio (P/E Ratio): Key to Judging Stock Valuation

P/E Ratio = Stock Price ÷ EPS

✅ Example: Stock price 50 yuan, EPS = 5 yuan → P/E = 10x 📊 Generally believed:

• P/E < 15: Low (may be undervalued)
• P/E > 30: High (watch out for bubble risks)

⚠️ Standards vary by industry: Tech stocks generally have higher P/E ratios than traditional manufacturing.

2. Return on Equity (ROE): Measuring a Company's "Profit Efficiency"

ROE = Net Profit ÷ Shareholders' Equity

✅ Example: ROE = 15% → Earn 15 yuan for every 100 yuan invested 🎯 Buffett prefers companies with ROE > 15%.

3. How to Read Financial Reports? Understand Three Major Financial Statements at Once

4. Free Cash Flow: The Real "Disposable Income" of Enterprises

Free Cash Flow = Operating Cash Flow - Capital Expenditures

📌 Why is it important?

• Can be freely used for dividends, debt repayment, and expansion
• More real than net profit (less susceptible to accounting manipulation)

IV. Practical Skills for Technical and Chip Analysis

1. K-line Chart Basics: What Do Red K, Black K, and Shadows Represent?

Each K-line contains four prices:

• Opening price
• Closing price (Red K = rise, Black K = fall)
• High price
• Low price

📌 Classic Patterns：

• Hammer Line：Bottom reversal signal
• Dark Cloud Cover：Top reversal signal

2. Practical Applications of RSI and KD Indicators: How to Judge Overbought and Oversold Conditions?

2.1 RSI (Relative Strength Index)

• Range: 0~100

• ≥70：Overbought → Potential pullback

• <30：Oversold → Potential rebound

2.2 KD Indicator

• K-line breaks above D-line = Golden Cross (buy signal)
• K-line breaks below D-line = Death Cross (sell signal)

3. Chip Analysis: Interpreting Institutional Trends and Margin Trading Balances

V. Investment Psychology and Risk Management Strategies

1. Common Investment Psychological Misconceptions: How Many Have You Fallen Into?

2. Setting Stop-Loss and Take-Profit: Core Discipline to Protect Principal

2.1 How to Set Reasonable Stop-Loss Points?

• Single loss should not exceed 2% of total capital
• Technical aspect: Stop loss when breaking below support levels
• Psychological aspect: Accept "small losses as trading costs"

2.2 Take-Profit Strategies：

• Target return rate: e.g., automatic sell at +20%
• Trailing stop: Gradually move stop-loss point upward after profit

3. Long-Term Investment Mindset: The Power of Time Compounding

Buffett said: "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

📌 Advantages of Long-Term Investment：

• Reduce transaction costs
• Benefit from dividend reinvestment compounding
• Avoid emotional trading

VI. Practical Case Studies

Complete Trading Process Demonstration for Beginners: From Stock Selection to Selling

Situation：You have 10,000 yuan and want to invest in tech stock ABC.

• Research Phase
  • Check financial reports: EPS growing for 3 consecutive years, ROE > 18%
  • Check valuation: P/E = 12x, lower than industry peers
  • Technical aspect: RSI = 28, entering oversold zone

• Place Buy Order

  • Limit order: Buy 200 shares at 4.90 yuan (total 980 yuan)
  • Accounts for <10% of total capital, in line with capital management

• Holding and Monitoring

  • Stock price rises to 5.85 yuan, RSI reaches 78 (overbought)
  • Reaches preset take-profit point, sell decisively

• Result：Profit of approximately 18%, steady gain after deducting fees.

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Conclusion: Investment is the Realization of Cognition

Mastering these stock terms, market nomenclature, analytical methods, and psychological discipline is your first step toward rational investment. Don't rush to make money; first take the time to "understand the rules". When you grasp concepts like "what is margin trading," "how to calculate P/E ratio," and "how to set stop-losses," your investment journey will be steadier and longer-lasting.

📌 Remember:

Price is what you pay. Value is what you get. —— Warren Buffett