Stock Trading

May 7th 2016

Overview

Stock trading is the process of buying or selling stocks of companies in the stock exchange. You should first understand how the market works before you can go in to trade. A stockbroker is someone who helps you with the process of buying and selling stocks or bonds. A stock market investment brings large returns, but it also involves huge risks. Before you start trading in the stock market, you should be aware of the risks associated with trading and invest wisely.

How It Works

Stock trading is the process of buying and selling stocks of publicly traded companies. Small stock investors and large hedge fund traders participate in stock trading. Exchange takes place in physical locations where the transactions are carried out on a trading floor. This method, known as open outcry, is used in stock and commodity exchanges where traders call out verbal bids and offers simultaneously. There is another kind of stock exchange, which is a virtual kind, composed of a network of computers where the trading is made electronically. In the stock exchange, a potential buyer bids a stock for a specific price and a potential seller asks a specific price for the stock. The sale takes place on a first-come, first-served basis if there are multiple bidders or askers for the same price.

Benefits

There are many benefits that can come from stock trading. One of the biggest benefits, of course, is the opportunity to share the profits of the companies that you invest in. It also offers a great amount of flexibility in work timings, educational qualifications and investment. You can work part time or full time, and even from your home. Another advantage is that you can work without interference, at your own pace and get immediate returns.

Cost/Pricing

When it comes to the costs of stock trading, the prices will vary depending on what type of stocks you wish to purchase. Stock prices of every company depend on the market conditions and the company's prospects. Transaction costs are incurred when the stock is traded. If you choose to hire a professional to trade your stocks for you or to advise you on marketing conditions, you may have to pay them a fee.

Timing

The ideal time to buy stocks is when their prices are low and sell them when the stock prices rise. You should be well versed with the financial market before you start trading in stocks.

Companies/Industries

Many companies are publicly traded in the stock market. Make sure you do your research to get as much information as possible on the company before you invest in it. Some of the famous stock exchanges where this trading takes place are the New York Stock Exchange, London Stock Exchange, Tokyo Stock Exchange and Bombay Stock Exchange. National Association of Securities Dealers Automated Quotations, or NASDAQ, is a virtual stock exchange, while Paris Brouse is an electronic stock exchange.

More in category

  • Stock Markets & Indexes
    Not an economist? No problem, you can still learn what it takes to thrive in the...
  • Warrants
    Don't know what a warrant is? No problem. The first step to understanding the st...

Related Content