Before you get started on penny stocks trading, you need to understand stocks investments lingo in order to be able to decipher what the newspapers, your broker, and stock exchanges mean. Here are a few of them:

Ask price: This is the price at which you can buy a stock.

Balance sheet return: This term refers to the measures of a penny stock company, profitability and company value. The balance sheet return usually includes measures such as the sales/price ratio, price/book ratio, book per share, profit margin, return on equity, and the reporting date.

Basher: This is a person who posts information on a message board with the intent of driving the penny stocks prices down.

Bid price: This is the price at which you can sell your stock.

Block trade: A trade usually involves 10,000 or more shares. In penny stocks lingo, block trade refers to a trade of 100,000 shares or more.

Book per share: This refers to the current fiscal year book value for every share of common stock.

Canceled order: This is a buy or sell order that is canceled before it has been executed. A canceled order can also refer to the cancellation of a limit order, or a market order. A limit order can be canceled any time, as long as it has not been executed. A market order, on the other hand, can only be canceled if it is placed after the closing bell of the day and canceled before the opening bell of the following day.

Capital stock: This is the amount of property contributed by stock holders that are used as the financial foundation for the corporation. Capital stock may be either common or preferred stock.

Current P/E ratio: This refers to the ratio of the current price divided by the last two quarters earnings per share (EPS), plus the next two estimated quarters earnings per share.

Day order: A day order is an order that remains open for one trading day until it is executed or canceled.

Discount broker: This is a broker who offers inexpensive transaction fees. The discount broker's prices are low because he does not provide investment advice.

Dog: This is a stock that is not performing well.

Due diligence: This refers to the research that you do before investing in penny stocks

Float: This refers to the number of shares a stock has available for trading purposes.

Full service broker: This is a broker who offers a full range of investment brokerage services, including financial advice and portfolio management.

Hypester: This is a person who posts information on message boards with the intent of boosting the price of a stock.

Limit order: This is an order to buy or sell a stock at a price specified by the customer. If you set a limit order you can specify the maximum price you want to pay for your purchase or the minimum price you will accept to sell your stocks.

Market order: A market order is an order to buy or sell a specified amount of stock at the current market rate. Once a market order is received it is executed immediately, at the best available price.

Market maker: This refers to a brokerage or a bank that represents a stock, and competes with other market makers to buy and sell the stocks. The market maker displays buy and sell quotes. The market maker is also called a broker/dealer.

MOMO stock: This is also called momentum mover. It is an investment strategy where a stock that is usually unknown and thinly traded is picked by investment clubs for day trading. Prices for MOMO stocks usually fluctuate severely.

Open order: An open order is an order to buy or sell a stock, which remains in effect until it is either executed or canceled by the customer.

Pump and dump: This is a penny stocks trading strategy where the prices of the penny stocks usually rise quickly because of hype, and falls drastically when the hype-makers unload their stocks.

Spread: This refers to the difference between the bid price and the ask price.

Stop limit: This is an order that combines both the stop and the limit order. If you put and activate a stop limit, your order can be executed up to your limit price. If the trading goes beyond your limit ceiling, your trade will not be executed.

Tanking: Tanking is when penny stocks lose their value very quickly.