Stock Trading 101

Lots of business men and women are making money by investing in the stock market. But what exactly is stock trading and how can it make you money? Well, that’s actually a good question. It’s a very good idea to learn all about stock trading before jumping in at the deep end. Trading a company’s stock can make you money if you buy at a low price and sell them later for more money.
It’s generally pretty easy to spot the people who are investing in the stock market. Most of them have a copy of the financial times clutched under their arm. Some people might make you believe that stock trading is very easy and a risk free investment.

No investment is without its risk. Investing in the stock market is very time consuming and is also fairly risky. That said, if done properly it is possible to make quite a lot of money from it.

Stock Broker

Normally when you trade stocks you will need to find yourself a stock broker. The stock broker will help you to buy and sell stocks. If you are using Dividend Reinvestment Plans, then you may not be as reliant on a stock broker.

There are quite a few different ways that you can invest in stocks. Some stock traders buy stocks and hold them for a long time. By holding it for a long period of time it has the potential to make the returns much greater.

Scalping is yet another type of trading. This is where traders try to profit from much quicker movements in the stock market. They try to make money from fairly small changes. It is possible to scalp during the same day.

Stock prices can fluctuate throughout the day. Although these changes are normally very small, it is sometimes possible to make money from them. Scalping is one of the more risky types of stock trading.

How Stocks are traded

Stocks are traded through a stock exchange. There are lots of different stock exchanges in different countries. These include the London Stock Exchange, New York Stock Exchange and Shanghai Stock exchange. The stock exchange connects the buyers and sellers of shares together.

Electronic Trading

It is possible to trade on the trading floor of many stock exchanges. However, this area is normally reserved for professional traders. Instead most trades are done over the internet.
Electronic trading is more convenient and less stressful. Computers handle all of the trades and there is a lot less shouting.

Why you need a Broker

If you want to buy stocks through a stock exchange then you will first need to register to be a member of the exchange. Registering to be a member of a stock exchange is generally very expensive. To reduce the costs a broker is helpful.

A stock broker already have a membership to most of the common stock exchanges. They can be used to buy stocks for you, and in turn you will have the ownership of the shares.
The majority of stock brokers will charge a fee each time you trade stock. You will need to choose the right stock broker for you, not all of them are good.

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