A stock is a small piece of ownership in a company. If a company has one million shares and you own 1,000, you own 0.1% of it.
Why people buy stocks
There are two ways to make money: the price goes up and you sell for more than you paid, or the company pays a dividend. Neither is guaranteed. A price can fall below what you paid and stay there.
Why the price moves
The price is the last price a buyer and a seller agreed on. More buyers than sellers pushes it up. More sellers than buyers pushes it down. Earnings, interest rates, news and plain sentiment all change who wants to buy.
What market cap is
Market capitalization is the total value the market puts on a company: share price times shares outstanding. A stock at $50 with 200 million shares has a market cap of $10 billion.
- Large cap: roughly $10 billion and up. Usually established companies.
- Mid cap: roughly $2 billion to $10 billion.
- Small cap: below roughly $2 billion. Often more volatile and thinner to trade.
- The exact cutoffs vary by index provider and source, so treat them as rough bands.
Price is not size
A $500 stock is not necessarily bigger than a $5 stock. Market cap is what compares size, because price alone ignores how many shares exist.
Education only, not investment advice. Trading involves real risk of loss, including loss of everything you put in. See the full disclaimer.