Stock Trading and Stock Investing

If you want to invest your money in the stock market, study and learn how to buy stocks. Fully inform yourself on stocks processes and terminologies before buying a share. There are two ways of purchasing a stock: one is through a broker and second is through a plan companies. You also take into consideration the price. The most expensive is broker of full-service. Next is the discounter and lastly is the online broker. Contact a firm or broker and ask for application. You may get one through the internet so you better ask them to know what method they use.

If you chose to purchase through a broker or brokerage, then you have to choose a broker offering full service, since you will entrust the money and the whole process to that expert. This will cost you a lot and commissions depend on the percentage of sale value. However, if you do not want to use the money on their full service offer, then you can choose discount brokerage. It costs less but they do not provide full assistance like brokers offering full service do. Typically costs around 10 to 20 dollars in exchange of a thousand shares. They charge a quarter of the price of that of full-service brokers. Brokers using the net cost the least, at 9 to 15 dollars per trade.

If you choose to put your money through Direct Investment or Dividend Reinvestment Plan, not all companies offer this so make sure first if that company you wish to put your money into provides either of the plans.

There are some terminologies, phrases and questions you need to know because these are the things brokers usually ask when you contact them. 'Market or limit order?', 'Day only or Good until cancelled?'

If you contact a broker, it means that you are willing to buy at any stake or any current value of the stock. If there is an exact value in your mind, you can set a range of price specifying the maximum to be the value you really can afford. If the current price suits the range, then the order will automatically be filled. This order may be open for a day (day only order) or for an indefinite period (good until cancelled).

If you purchased the stocks, then you may instruct the broker to trade those when the price falls to a value you indicated. It is called 'a stop loss order'. That is a kind of strategy insurance, where you will not lose a certain amount regardless of the situation.

Some investors who do not want to risk more often set a value of 10% to 20% below its sale price. This causes them to lose money and liquidate their shares even though at some times the trend will again swings up. There can never get the loss money back unless they again venture into another stock and become successful. Always remember that the stock market is an unpredictable state, you never know when it will rise or fall. The thing you have to prepare is how you take the risk or if you are willing to take one in the first place.

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