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Blue Chip Kids: What Every Child (and Parent) Should Know About Money, Investing, and the Stock Market by David W. Bianchi

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CHAPTER 4 LET'S BUY AND SELL SOME STOCKS

There is so much information available regarding the stock market, it is hard to know what to focus on. Here are just some of the terms that you should know about to have a better understanding of how it works.

Buy the Dips

This is a common expression you will hear when you listen to people talk about the stock market. Buy the dips refers to waiting to buy a stock until it has “dipped” or gone down so that you can buy it for less money than it is selling for now.

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If you had a choice, would you want to buy a new bike for $400 or wait until it goes on sale and you could buy it for $300? If you waited until you could get it for $300, you would be buying the dip.

It is the same thing with stocks. Many traders will not buy stocks at today's price but will wait until there is a market pullback so they can buy the stock they want on a dip.

Bulls and Bears

If you look at the logo for Merrill Lynch, one of the nation's largest wealth management firms, you will see a drawing of a bull staring at you. Go ahead and Google “Merrill Lynch” and you will see what I am talking about. Why a bull? What is the significance of that?

In the world of money and finance, the bull symbolizes something that is strong, charging ahead and going up in value. If the stock market has been going up for a long time, people might say, “We are in a bull market. ...

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