Stock Market Basics: Buying & Selling Stocks
Buying and selling stocks can be a very confusing task because there are many things to learn about the stock market basics.
First, one must understand the basics and the foundation of stocks. Stocks are nothing more than parts of ownership in a company. Basically, a company offers stocks to the public to finance their company. Buying stock makes you a shareholder, and in essence, you own part of the company even if you are buying penny stocks.
There are different types of stock that one could buy. First is common stock. Common stock is exactly as it is stated, common, and holds no preferences. When the company offers a dividend, you are entitled to it. The next step up is preferred stock, which means you get a higher priority when it comes to dividends, meaning you get paid first.
Voting / participating stock is also available, where you can vote on issues of the corporation. Stocks of large publicly traded companies are traded on the open market, at such places such as the New York Stock Exchange, NASDAQ, etc. At the New York Stock Exchange, deals are done face to face in person. Prices are determined by an auction format in essence, meaning whoever pays the most, gets the stock. While this is going on, people can sell stocks at that price, and you are actually “trading” stocks. You may never meet the person you are trading with, but in essence that is what happens in two separate transactions.
Stocks can change constantly, due to many different things. It works on supply and demand, meaning if more people want a stock, the stock prices go up, and conversely, less interest equals a lower price. The most common way to purchase a stock are through brokers.
There are in person brokerage companies, such as Merrill Lynch, or you can go online and trade online yourself or through a broker. Online sites such as Scottrade, Etrade, etc let you trade stocks on a real time basis, and only cost a few dollars per trade. Many people may be enticed to buy penny stocks, but those are almost a sure bet to make you lose money.
Overall, there are some basics that were outlined that are important to trading stocks, but to really be successful, there is a bunch more to learn.
Tags: brokerage companies, common stock, dividend, dividends, etrade, merrill lynch, money, nasdaq, new york stock exchange, penny stock, penny stocks, preferred stock, Scottrade, selling stocks, stock exchange nasdaq, stock market, Stock Market 101, Stock Market Basics, Stock Market Basics, stock prices, trading stocks, types of stockRelated posts
Basics of Researching Stocks
The stock market is a great tool to gain a ton of money and lose a ton of money. Those that gain are those that do research, while those that lose probably hear something from one person, don’t research, and then buy it that day. They did zero research into the stock market basics and are destined to lose their money.
There are many things to look for when researching stocks and understanding the stock market. First off, is the company large or small, and what industry are they in? Pharmaceuticals are usually great buys since all it takes is one drug to take off and you have a winner. Other things to look at are the companies financials which give you key rations to know. Cash flow per share is important because it tells you how the company is spending their cash. If they are spending a lot of cash, they may not be a safe investment, but of course they could be investing the cash wisely, making them a good buy. Financial grade health is also important, if a company has no money, it isn’t wise to invest.
Companies with the highest grades are the most solid financially, and are normally better options. Growth grade refers to sales and if they are rising or decreasing. Again, the higher the grade, the better the investment. Many big companies and institutions buy stocks in many different things to hold value and make them money over time. If a stock you want to buy doesn’t have any of that, why would you want to buy that if those large companies don’t think they will make money over time?
Another big thing to look at is the accounts receivables of a company. Accounts receivables is how much money that is owed by customers for their purchases. If a company has a lot of accounts receivables, this means that there is less cash and more risk that they will get paid. The less accounts receivable the better. And of course the last piece of research are listening to stock analysts and your broker.
They can give you personal insight and advice on what they might do if they were in your decision. Research can be tough, but all it takes is asking a few people and looking at a companies financial history, and then you can determine if it is a good investment or not.
Tags: cash flow, investment, money, stock analysts, stock market, Stock Market 101, Stock Market Basics, Stock Market Basics, stocksRelated posts
Stock Market Basics Of Online Trading
When it comes to getting involved in the stock market, there isn’t that much that you need to know to get started. If you’re trying to be successful in doing online stock trading, you’ll need to know much more than just buying low and selling high. Having an understanding of the stock market basics will help you so much more than listening to anyone with a “hot stock tip”.
It’s the same way with these websites that seem to be popping up on what seems to be a daily basis. With the overall market being down so much from it’s high in 2007, there are many traders out there that are trying to make their money back by starting these subscription base websites. In doing so they not only make money on the website’s traffic, but also in the stock that they are pumping at any given moment.
I’m not saying that every site out there is doing this type of shady practice, but I know that there are quite a few out there. You as an investor/trader need to take responsibility of your portfolio and your actions instead of expecting someone else’s decisions to make your stock purchases. Yes, it’s a lot more work for you to research stocks and to do your due diligence on a daily/weekly basis, but at least you know where your money is and who it’s invested with.
No matter who you may open an account with for your online stock trading, you need to use the tools and other resources that the site provides to really know who you should and shouldn’t be investing in. You should also use other sites to affirm your research. Don’t ever rely on one site to do all your research on. Some sites will list things different than others and in some cases, you’ll find information on one site that you couldn’t find on the others. Remember, knowledge is power and someone else’s knowledge will only take you so far.
Tags: investor, money, online stock trading, research stocks, stock market, Stock Market 101, Stock Market Basics, Stock Market Basics, stock purchases, stock tip, stock trading, stocks