Stock Trading 101

By on July 9, 2013

Trading stocks is one way to supplement your income and help it grow with little effort on your part. When you invest your money wisely into profitable companies, you gain more money as well. The key to stock trading is to know what trading really is, how to trade, and where to invest your money.

What are Stocks?

Stocks are part-ownership of a company. When you own a company’s stock, you have a claim in their company. For example, if you own 100 shares of a company, and the company only has 200 shares, you have 50 percent ownership of that company. The more shares you have in a company, the more your profitability is tied to that company.

Stocks are sometimes called shares or equity, but they mean the same thing. When you own stock in a company, you share in profits and voting rights.

Where to Start Trading

Since trading stocks is a great way to increase your income, many people want to get into trading. However, getting into trading is complicated. There are generally four ways you can get into trading today. To obtain stock, you must purchase your stocks through a licensed purchaser. These ranges from order-takers to full-service brokers who can advice and move your money around for you.

The perfect place to start trading is actually not with real money at all. Many online trading sites allow you to set up practice accounts. With these accounts, you can trade fake money in the real market. This helps you figure out how the market works before you risk losing your hard-earned cash in the real market.

Seeking Professional Help

If you are new to the world of trading, using an experienced broker is a prudent choice. The best choice for novice traders are full-service brokers. These brokers act like your financial representatives. They will sit down with you in person and set up a complete financial profile for your present and future. Full-service brokers not only help with stock trading, but they can also help with estate planning, taxes, retirement, budgeting, and anything else dealing with money.

If you do not want quite the commitment of a traditional broker, you can try a discount broker. Some discount brokers offer basic financial advice about trading in the market. These brokers are both online and offline, although there are many more online brokers. These brokers will work you through the basics of trading, either over the phone or through online chat. Some sites offer educational videos and charts for users to take advantage of them.

Trading on Your Own

If you believe you can make the best investment decisions for your future, you may want to use a broker that is simply an order-taker. You tell the site what you want to order, and the brokers will make the trade for you. You do not have to speak with a person, and you are completely responsible for your investment future. The fees for this kind of trading are typically done per-trade. Some sites may also charge a monthly usage fee.

Stock trading is a large field with many aspects to consider. However, thanks to technology, trading effectively is easier than ever.

Featured images:

License: Royalty Free or iStock

source: www.shutterstock.com

Allen Marsh wrote this guest post on behalf of OptionXO the service provider of OptionsXO binary options trading. He is a freelance writer who shares his business tips on various blogs.

About BloggerOne