Money and markets in plain words

A share is a tiny piece of a company. Owning one makes you a part owner, so if the company grows, your piece can be worth more.

Try this: Pick a company whose product you used today and say out loud what you would own with one share.

A share is ownership. A bond is a loan to a company or a government that is paid back with interest.

Try this: Explain the difference between a share and a bond to someone at home, one sentence each.

A stock's price is what the last buyer and seller agreed on. No one person sets it, and it changes all day.

Try this: Think of something that sold out fast and write one sentence on why its price went up.

When more people want to buy than sell, the price usually goes up. When more want to sell than buy, it usually goes down.

Try this: Name one thing whose price changed lately and guess whether buyers or sellers moved it.

Some days prices wiggle for no clear reason. That is normal, and it is not a signal to do anything.

Try this: Watch one changing number this week, like a score or a temperature, and notice how often it moves for no big reason.

News changes what people expect a company to earn, and those expectations move prices.

Try this: Read one business headline and predict whether buyers or sellers would show up first.

Sometimes good news barely moves a price, because investors already expected it.

Try this: Think of news everyone saw coming and explain why it might not change much.

A bull market mostly rises and a bear market mostly falls. Bulls hit upward with their horns. Bears swipe downward with their paws.

Try this: Teach the bull and bear trick to a friend without looking at this tip.

Net worth is everything you have: your cash plus what your investments are worth.

Try this: List your cash and two things you own, guess what each is worth, and add them up.

When you buy a share, your cash goes down and your shares go up by the same amount, so your net worth does not change at that moment.

Try this: Explain why trading cash for a share does not make you richer or poorer right away.

A capital gain is profit from selling for more than you paid. A gain on a screen is not real until you sell, because prices can fall back.

Try this: Something you bought for 20 is now worth 25. Say your gain if you sell today, and what it is if you never sell.

A dividend is a payment some companies send to their owners, like sharing a little of the profit. It is never guaranteed.

Try this: In one sentence, explain why a company might share some of its profit with its owners.

Percent lets you compare things of any size. A rise from 50 to 55 is 10 percent, but a rise from 500 to 510 is only 2 percent.

Try this: Work out the percent change of something that went from 20 to 25.

Percent change is the new number minus the old one, divided by the old one, times 100.

Try this: Find the percent change from 40 to 44 on paper, then check it with a calculator.

On a candlestick chart, each candle is one day. Green means the price ended higher than it started. Red means it ended lower.

Try this: Draw one green candle and one red candle, and label the open and the close on each.

The thin lines above and below a candle are called wicks. They show the highest and lowest price that day.

Try this: Draw a candle that opened at 40, closed at 43, went as high as 44 and as low as 39.

Charts show what happened, not what will happen. A chart is one tool, not a crystal ball.

Try this: Name one thing a chart can tell you and one thing it can never tell you.

Bigger possible rewards usually come with bigger chances to lose. Nothing is guaranteed.

Try this: List one choice in your life with a big reward and a big risk, and one that is small and safe.

Volatility is how wildly a price jumps up and down. A roller coaster is volatile. A slow train is not.

Try this: Name something in your week that is volatile and something that is steady, and compare them.

Big companies have billions of shares, owned by millions of people, pension plans and funds.

Try this: Explain why one owner out of millions cannot decide a company's price alone.

A stop price is a safety line. If the price falls to it, the shares sell on their own, so one bad day cannot sink you.

Try this: A pretend share costs 50. Set a stop 5 percent below it and work out the stop price.

The most you could lose on a trade is the drop to your stop times the number of shares.

Try this: You buy 20 pretend shares at 40 with a stop at 38. Work out the most you could lose.

Professional traders decide how much they are willing to lose before they buy, not after.

Try this: Before your next practice trade, write down the most you are willing to lose on it.

In RGO Class you can raise a stop to lock in a gain, but you can never lower it. Lowering a safety line only lets a loss grow.

Try this: Explain to a friend why moving a safety line lower defeats its purpose.

A stop set too close can sell on a normal wiggle. A stop set too far can let a loss grow big.

Try this: For one pretend trade, pick a close stop and a far stop, and write one problem with each.

Seat belts and insurance work like stops: a small cost or limit protects you from a big loss.

Try this: Find one safety limit you use every day and explain how it is like a stop.

A take profit price is a target above what you paid. When the price reaches it, you sell and keep the gain.

Try this: A pretend share costs 60. Set a target 10 percent higher and work out the target price.

Pick your stop and your target before you buy. Many traders aim for a target at least twice as far away as their stop.

Try this: Plan a pretend buy at 100 with a stop at 95, and work out where a target twice as far away would go.

Greed and fear make people sell too early or hold too long. A plan made in advance helps you stick to your choice.

Try this: Write a one sentence plan for a pretend trade, then explain how it protects you from fear.

Diversification means spreading your money across different companies and industries, so one bad story cannot hurt everything.

Try this: Pick three companies you know from three different industries, like food, shoes and games.

Spreading your bets lowers risk but does not remove it. A whole market can still fall at once.

Try this: Name one kind of event that could make many companies fall on the same day.

In RGO Class, no company can be more than 25 percent of your team's money. That keeps one bet from sinking the whole team.

Try this: Your team has 100,000 in practice money. Work out the most one company can hold.

Owning a sunscreen shop and an umbrella shop is safer than owning two sunscreen shops. A rainy summer cannot hurt both.

Try this: Invent two businesses that would do well in opposite kinds of weather.

An index fund owns many companies at once, so one share of the fund is a tiny piece of all of them.

Try this: Explain to someone at home what it means to own a tiny piece of many companies at once.

The letters ROI mean return on investment: your gain or loss divided by what you put in, as a percent.

Try this: You put in 200 and end with 230. Work out the ROI.

Fees are what you pay to buy, sell or hold an investment, and they lower what you keep. A 1 percent yearly fee on 10,000 costs 100 every year.

Try this: Work out what a 1 percent yearly fee costs on 500.

When news comes out, predict the move first, then check what really happened. Being wrong teaches you as much as being right.

Try this: Pick one headline today, write up or down, and check back in two days.

Companies report their earnings four times a year, and prices often jump or drop that day.

Try this: Explain why a surprise in an earnings report can move a price more than old news.

Support is a price a stock has bounced up from before, where buyers tend to show up. Resistance is a price it has had trouble rising above, where sellers tend to show up.

Try this: Draw a line that dips to the same level three times, then label the support.

A single candle pattern is a clue, not a promise. Wait for the next candle to confirm what it hints.

Try this: Draw a doji, a candle that starts and ends at about the same price, then draw two different next candles.

Compounding means your growth earns growth. 1,000 growing 10 percent a year becomes 1,100 after one year and 1,210 after two, not 1,200.

Try this: Work out what 500 becomes after two years of 10 percent growth.

Over long periods, longer investments usually earn more than short ones, because growth has more time to compound.

Try this: Write down one goal that is ten years away and one that is two months away.

When you need the money decides how much risk you can take. Money for a trip in two months should stay safe, because prices can fall before the deadline.

Try this: Name one thing you are saving for and decide whether it is soon or years away.

Day trading means buying and selling within hours or days. It is fast and risky, and studies show most day traders lose money.

Try this: Explain in your own words why fast trading is harder than holding for years.

Long term investing means buying and holding for years while companies grow.

Try this: Name a company you think will still matter in ten years, and write one reason why.

Retirement accounts are built for decades, not days. Many workers own stock through them without picking single companies.

Try this: Ask a trusted adult what a retirement plan is and write down one thing you learned.

Last year's winner may not win this year. Past results do not promise future ones.

Try this: Think of a team or a game that was on top and then fell, and name what changed.

A high share price does not mean a better company. It only tells you what one piece costs right now.

Try this: Compare two things you could buy where the one that costs more is not the better one.

Know what you own and why. If you cannot explain a choice in one sentence, slow down.

Try this: Pick one thing you bought this month and explain in one sentence why you chose it.

The RGO Class score rewards smart habits, not just luck. Stops on your buys, reasons for your trades and spreading your bets earn points even when prices fall.

Try this: Name the habit you would practice first to raise a team's score, and say why.

In RGO Class, points for results are capped so one lucky bet cannot win. Habits count for more than half of the score.

Try this: Explain why a fair game should not let one lucky bet win everything.

Writing down why you buy helps you learn from every trade, win or lose. In RGO Class, your reasons are part of the score.

Try this: Before any choice with money this week, write one sentence on why.

In RGO Class each teammate has a job, and ideas posted for the Trader count toward the team.

Try this: Name a team you are on and the job you do best for it.

After a trade, notice how you feel. Fear and excitement push people to act fast.

Try this: After your next big choice, name the feeling you had and whether it helped.

Two days after a trade, RGO Class shows what the price did next. Looking back at your choices, right or wrong, is how you learn.

Try this: Look back at one choice from last week and name one thing you would keep and one you would change.

Investors often sell part of a winner to lock in some of the gain and keep the rest.

Try this: In a pretend trade, decide how many of 10 shares you would sell at your target, and explain why.

Practice money is for mistakes. In RGO Class mistakes cost nothing, so try, miss and learn.

Try this: Name one mistake you learned from and what it taught you.

Families track their net worth over years to see if they are building wealth.

Try this: Make a simple chart of something you save and add a new point to it every month.

The rules you practice with pretend money, like a stop on every buy and no more than a quarter in one company, are habits you can keep for life.

Try this: Write those two rules on a card and explain each one to a friend.

Owning your choices includes helping the students coming up behind you.

Try this: Teach one money idea from this site to someone younger than you.