Buying, Selling, and Trading Stocks Online
Owning stocks in the stock market used to be a sign that you were a person of affluence and wealth. Now almost anyone can own a stock, but this doesn’t mean that everyone knows how to work with the stock exchange and how to correctly and profitably buy, sell, and trade stock shares.
There are some basics that everyone should when they invest their time and money in the stock market. While this may seem old hat to some people, definitions can almost always help out when words like stock can be so interchangeable.
Stocks are small shares of the corporation. The more stocks you buy the more you own of the corporation; you are a shareholder. Companies are continuously “going public” or setting up an initial public offering which allows the public to buy stock in their corporation. If a company is particularly successful they will issue part of their profits out to their shareholders; this is known as a dividend.
There are two types of stocks a shareholder can invest in. Income stocks issue dividends, and growth stocks take their profits and reinvest them in the company.
If you buy and sell stocks daily or weekly, you may have a broker. If you feel comfortable enough, you may buy and sell yourself. This buying and selling occurs online. The broker begins by issuing a request in an online market or exchange and the company will then approve orders and exchanges until the online market “closes.”
There are several different ways you can trade online, and they all involve different strategies. It is recommended to trade your stocks according to how you live your life. If you can’t dedicate enough time to trade daily then be a weekly or a monthly trader.
Day-trading allows you to close out your accounts each day, and lets you know where you stand at the end of the day. Day-trading also allows you to control the amount of risk you have when trading and selling stocks. You are able to more accurately pay attention and trace the patterns of the stock markets.
When investing in stocks, especially online, it is easy to lose track of your money because it is never passing directly through your hands. Perhaps more important than knowing what to invest your money in is having the knowledge of when to take your money out. Selling stocks is how you gain profit after all.
A term used commonly by investors is whether or not they possess a “winning edge.” Keep track of the positive factors you have and whether or not these get you more money. If you don’t have any factors that are gaining you profit, you probably don’t have a winning edge.
· Online trading can be compared to betting online in a way.You wouldn’t bet money you don’t have, and you wouldn’t bet on a team or a person that you know is unreliable unless you are aiming to be a contrarian. In stocks, only in rare occurrences does betting on the underdog ever pay-out profit.
· Know how much money you can spend and watch the market fluctuate before investing it.Learn the patterns and pay attention to any company getting a lot of publicity in the news. For instance, if a company has bad publicity pay extra attention to their stocks, and record what happens. This gives you an edge over anyone else buying their stock. You are prepared.
· Associate yourself with people who know what they are doing in the stock market. You will be surprised what you can learn from a simple conversation, strategies, tips, and hints. If you can, watch how others invest around you and learn from their mistakes; in this way you don’t have to lose your money to find out what doesn’t work.
· Get educated.Take an online course or buy a book about online trading. Yes, education is expensive, but nothing worth doing is easy. Getting some logistics and background knowledge under your belt can be just the factor you needed to develop the winning edge talked about earlier. Remember, knowledge is power.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.