Stock prices are determined by the basic notion of supply and demand. They move up and down in price depending on how valuable the stock is at that particular moment to buyers and sellers. This concept is taught to BetterTrades students, who learn how to make money through a stock's movement.

Stock represents ownership in a company. The price of the stock reflects the feeling of the investors at that particular time. Prices change all the time for a number of reasons and you must be aware of them in order to make better trades.

Some stocks have dramatic shifts every day, while others rock along with little change in their price. Apple Computers (AAPL) is an example of a volatile stock that typically has large movements in its price each day, often $5 or more in a day. Microsoft (MSFT) is an example of stock which moves much slower, rarely as much as $2 in a day.

A stock has two prices listed on the stock chart: a bid price and an ask price. You buy at the ask price and sell at the bid price. The ask price is always the higher of the two prices. A buy order submitted at the ask price will likely be filled immediately.

A buyer can try to "get in the spread," the amount between the buy and ask price. Sometimes the market maker will approve as much as 30 percent in the spread. The difference doesn't sound like much, maybe a dime on an option, but can add up quickly on big purchases.

There are two basic orders: a market order and a limit order. Placing a market order authorizes the broker to fill the order at the current quoted price, while a limit order gives the broker a set price at which to fill the order. BetterTrades encourages its students to stay away from using market orders, since it takes away your control and puts it in the hands of the broker or market maker.