Common Stock
Common stock is a share of ownership in a company. When you buy a share of common stock, you own a small slice of that business, along with a claim on whatever it's worth and whatever it earns, split proportionally with every other shareholder.
Owning common stock typically comes with a vote. Once a year or so, a company holds a shareholder meeting, and common stockholders can vote on things like who sits on the board of directors and other major decisions. Most day traders never touch this feature, but it's part of what separates common stock from other things a company can issue.
Common stock sits at the bottom of the pecking order if a company runs into trouble. If it goes bankrupt and is liquidated, lenders get paid first, then holders of preferred stock (a separate, less common class of shares that usually pays a fixed dividend and has a stronger claim on assets but no voting rights), and only after that do common shareholders get whatever is left over — which is often nothing. This is the trade-off: common stock has the most upside if the company does well, and the least protection if it doesn't.
The nuance that trips people up is that "common stock" is just a label for the ownership structure — it says nothing about how a stock behaves on a chart. A $2 biotech stock and a $400 blue-chip stock can both be common stock. The term describes what you legally own, not how volatile, liquid, or tradeable the shares are.
Almost everything a day trader actually trades — the tickers on a screener, the shares in a broker account — is common stock, so understanding what you own (and where you rank if things go wrong) matters even if the holding period is minutes rather than years.
A trader buys 100 shares of a company's common stock at $50 each, spending $5,000. They now own a tiny fraction of that company. If the stock rises to $52, their position is worth $5,200; if the company later goes bankrupt, they'd only see any money back after all lenders and preferred shareholders were paid first — which for common holders often means getting nothing.
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