Buying and selling in the stock market is like complicated science to people who don’t know anything about it. But a lot of people who are not really in the know are ‘playing’ in the stock exchanges around the world. All you really need to know are the fundamentals of the stock market. Today, almost anyone can buy or sell stocks since this activity is available online. Yes, your chances of succeeding in the stock market will increase if you have a financial background and if you know enough things about investing. And one more thing: you don’t have to be rich to do it. All you need is an online account.
But make no mistake, although you don’t need to know the intricacies and the strategies in dealing with stocks, you should nevertheless take stock trading seriously. It is your money that is at stake. You just don’t want to lose it just like that. You need to be educated in its fundamentals so that you will be able to use it to your advantage. In this regard, we will give you the important fundamentals you need to know before you start buying or selling stocks in the stock market. We will concentrate on online stock trading since this is the most convenient way you can do it. Since there are many frauds in the stock market, this article will also show you how to protect your investment.
Basic Stock Market Terms
First off, you need to be aware of the basic terms used in the stock market. Here they are.
- Share – a small piece of a corporation or a company is called a share of stock.
- Dividend – when a corporation or a company earns a profit, it will pay dividends to its shareholders.
- Brokers tradex1 – they are the people whom you will use to buy and sell stocks
- Stock market exchange – this is where brokers sell and buy stocks. Whenever a broker makes a transaction, the exchange will charge him a commission. The world has several major stock exchanges where big transactions are conducted every day. Some of them are the NASDAQ, an electronic exchange, the Tokyo Stock Exchange and the New York Stock Exchange.
- Online broker – this is the person that you will call whenever you want to buy or sell your stocks in the stock exchange.
Before Choosing A Broker
The very first thing you need to do, if you want to succeed in online stock trading, is to find an honest and effective stock broker. An honest broker is also important in protecting your investment. Here are the questions you need to ask yourself before choosing an online broker.
- How much money am I willing to invest?
- How frequent do I want to buy or sell stocks?
- How much guidance will I need and how extensive is my trading experience?
- How much help will I need from a stock broker?
When you have already answered these questions, it is now time for you to search for online brokers that can satisfy your preliminary requirements.
Opening An Online Account
If you want to open an online account, you should provide your broker important information such as your experience in financing and investing. He needs this information to determine if you could sustain your investments in the stock market. Aside from your personal information, you must also tell him the type of account that you prefer. There are several types of accounts that you can choose: retirement account, custodial account, joint account and individual account.
How To Protect Your Investment
Choosing an honest broker is one way you can protect your investment. You can do this by researching the broker’s history and background. Read the annual reports and the financial statements of the broker. Look at his record at the SEC, particularly in the Electronic Gathering Analysis & Retrieval System.