Monday, December 10, 2012



 We are young and can afford to gamble, so why wait until you get older to buy some stocks. You might invest in the next Apple or Google, you never know. I got in the stock market myself and made a few bucks gambling with penny stocks (stocks under $10.00), but let’s just say, you need to read a lot and constantly check your account for sudden drops or sudden raises. You can invest in different ways. But first let's ask this question.


 Well a stock is an ownership share of a company also known as equity share. Shares represent a fraction of ownership in a business. There are different types of shares, Common stock and Preferred Stock. A Common stock carries voting rights that can be exercised in voting decisions. A Preferred stock has no voting rights but dividends are paid to these shareholders first.

There are two ways you can make money with a stock,

1. DIVIDEND- When a publicly owned company is profitable they can choose to distribute some of those earnings to the shareholders by paying a dividend. The shareholder can decide to take the dividend in cash or re-invest in more stocks.

2.  CAPITAL GAIN- Stocks are bought and sold constantly throughout each day, and process change all the time. When a stock price goes higher than what you paid for, you can sell you share at a profit. This is known as capital gain.


 The Stock Market is where stock brokers and investors buy and sell stocks, bonds, and securities. The Stock Exchange also provides companies with the facility to raise capital for expansion through selling of shares to the investing public.

The top five exchanges worldwide are,

 Each Exchange has different requirements that allow companies to be listed and traded there. For example for a company to be able to be listed with the New York Stock Exchange, a company must have issued at least a million shares of stock worth $100 million and must have earned more than $10 million over the last three years. Each exchange has different requirements thus allowing different companies to be listed and traded within their spectrum.


 To buy and sell stock, you usually need to have an account at a brokerage firm, also known as a broker-dealer, and give orders to a stockbroker at the firm who will execute those instructions on your behalf.
You can place buy and sell orders over the phone with your broker or you can trade stocks online.
Full-service brokerage firms provide research as well as trade executions and may offer customized portfolio management, investment advice, financial planning, banking privileges, and other services. Discount firms offer fewer services but, as their name implies, generally charge less to execute the orders you place. The trick is to find the balance that's right for you.

Many investors can trade online now, and many websites provide with all the research that a full time broker can provide. All you need is time and know what to research for. Some of these websites are,

1. E*TRADE- A minimum $1,000 startup deposit, $9.99 for every transaction you make and if you open an account with $10,000 they will give you $500.00.

2. SCOTTRADE- A minimum $500 startup deposit, $7 per trade for stocks prices over $1. If you are new in the investment game I recommend this one, you don’t need a lot of money to start up with and with the research they offer you can never go wrong. 

3. FIDELITY- A minimum of $2,500 startup deposit, $7.95 per trade commission.

4. TD AMERITRADE- A minimum of $2,000 startup deposit, $9.99 per trade commission.


 Scalping involves stock trading that seeks to profit from quick moves in stock prices, usually seconds or minutes. Most of these moves occur in the morning hours, so a scalper must be available to trade during this time period without distractions.

  Day Trading involves stock trading that seeks to profit from stock price movements that occur during a single day. Day Traders do not hold positions overnight. Day Trading is commonly used based on microeconomic news that becomes available such as retail sales reports or company earnings news. Strict stop losses must also be used to prevent greater losses than expected to be successful. A problem that occurs with Scalping or Day Trading is that once you have a profit on a trade, it is common to leave it alone and expect it to keep going.

   Swing trading involves stock trading that seeks to profit from stock price movements that occur over several days or months at a time. Swing Trading involves using technical analysis and/or fundamental analysis to forecast future price movements. Swing Trading is much better suited for someone who only has time to do research in the evenings or a small part of the day.

   Long term buy and hold investing involves stock trading or investing for someone who is willing to wait months or years for a potential profit. Typically this style of investing involves looking for undervalued companies; improperly valued companies; buying stocks based on macroeconomic outlooks; and people who don't want to watch their investments daily- as compared to Scalping, Day Trading and Swing Trading which all require closely monitoring any positions. There is the least amount of stress in this type of trading, although there is still stress. When the stock market is in a bear market, whether short term or long term, this type of investing is just as stressful to the Long Term Investor as any other type.
 Many Scalpers and Day traders will trade penny stocks as their price will rise or drop faster.

 If you want to have the perfect portfolio here is an article you can read to have a better understanding, THE PERFECT STOCK PORTFOLIO.

 I hope some of you guys start thinking of ways to make money, remember investing in stocks is a great and fun way, but be smart and don't let your emotions take the best of you. Do your research and take your time. If you are new at trading take a month and play with THE STOCK MARKET GAME, they will give you $100,000 virtual money for an online portfolio. Play with your friends and see who made the most money in a month, and then get in the real game with your real money.



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