How to buy stocks
Stock means you are one of the many owners of a Company and you have a role in the management and share in the profits and losses of the company. It is represented by a share certificate but with the advent of internet and e-commerce now the share certificates are dematerialized which means information is recorded electronically. A share holder has a say in the management with their voting rights and share in the profits of the company in the form of dividends.
2 types of Brokers-
Full Service brokers who always have eye for detail on the happenings in the stock market and Discount Brokers do less of this. For e.g.Merrill Lynch, one of the worlds leading financial management and advisory companies, a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide is a full service brokers have online components which serves with the entire How to buy stocks stock broking tips and help that you need and Schwab and Fidelity-discount service brokers offers services at a low cost structure. You will get full information on brokers from National Association of Securities Dealers at 800-289-9999.
How to buy stocks at any price whatever happens to be the prevailing market price. Set the price and not buying beyond the price set 5 Steps to enter into Stock Market Decide on what you want to invest-whether mutual funds, equity stocks or bonds and also on whether long term investment or short term or for day trading etc. Get complete information
on the stocks you are planning to buy/invest from brokers, internet and the financial statements and prospectus issued by the company. Choose a broker or a brokerage firm who will advice you on this. It is better to opt for full service brokers in the beginning as they provide you with expert advice also. Contact them through online or in person and make arrangements for account opening Once the account is opened you can start buying or selling shares based on our interests
Types of Stocks
Equity stock means-risk bearing, long term, capital growth, high yields and say in the management. Preferred Stock-no voting rights but have preference over equity stock holders in sharing the dividends because they are guaranteed a fixed percentage of dividends forever. Also if the company is liquidating these stock holders have the preference in getting their payments.
Stocks Basics: How Stocks Trade
Stock trade is done in stock exchanges. Buyers and sellers meet at this place and decide on a price.It is a common platform for buyers and sellers which makes trading easy and less risky. There are primary markets where the stock is issued first time in the market by way of IPO-Initial Public Offering and secondary markets where the investors trade the securities already available in the market. Before we go on, we should distinguish between the primary market and the secondary market. The primary market is where securities are created (by means of an IPO) while, in the secondary market, investors trade previously issued securities.
The New York Stock Exchange
The most prestigious exchange in the world is the New York Stock Exchange (NYSE) started over 200 years ago. Currently stocks like General Electric, McDonald's, Citigroup, Coca-Cola, and Wal-mart etc are traded in NYSE. Based on the orders that come through brokerage firms that are members of the NYSE will flow down to the floor brokers.There is a specialist with role of matching buyers and sellers requirements. Prices are determined using auction method-any buyer who willing to pay the maximum amount is the current highest price How to buy stocks and the seller who is willing to sell is the lowest selling price.
The NASDAQ
Competitor of NYSE. Worlds largest companies are listed in NASDAQ.
Other Exchanges
After NYSE and NASDAQ, AMEX- American Stock Exchange is the third largest.
Bulls and Bears in Stock Market
A bull market is when economy is booming, prices of stocks are rising and GDP is growing. If a person believes the prices will go up he is called a bull.Bear market is when the stock prices are falling and economy is bad. If an investor feels that prices going to fall down further he is represents as a bear or with bearish outlook.
Caution
Experienced people play with stocks making money by jumping in and out of stocks but it is tough game for inexperienced hands.
Traders
Experienced traders can make money jumping in and out of a stock thats caught the publics attention, but its not a game for the inexperienced and its not investing. Some investors try to grab every opportunity to buy high performing stocks and they end up paying high prices. Another trend is when the stock market falls, all will rush to sell and will result in more fall. But at times it is a bad decision because the stock market performance is not only driven by price factor, the company may still be sound but due to other factors How to buy stocks might have gone down.
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