Introduction To Stock Trading

You have probably heard that the market is experiencing some highs and you have been motivated to join those of us who have decided to spend time gambling on which direction stocks will move. While you may be excited about the possibility of making some big bucks, a word of caution is in order. It is not as easy as it seems and you will have to work hard to make any big earnings. 

First of all, there is no guarantee in this type of market. Even if you have received stock market advice that says you should jump in and invest, you have to look before you leap. As you play with your stocks, you will realize that the having the right information and exercising patience are two things that will help you succeed. Information is important because you need to study the company in which you invest. As for patience, it is very important to help you stay focused. Most of those who are new to trading will be shaky and sell at the first sign that stocks are rising. Then when prices continue to rise, they will be annoyed with themselves for not waiting long enough.

Brokerage

When you are dealing with stocks, you may have to use a broker. There two different types of brokerage firms. There are those that are full service brokers and others that are discount brokers. Full service brokers will offer advice on wheat to buy, when to buy and how to buy. Most times, they have a quota that you are expected to meet. This is why it is important to be careful when accepting advice from this type of brokerage firm. Also, note that some of these brokerage houses may want to lure you towards certain stocks. This is because some of these stocks are handled by their firm. Discount brokers will not offer you any form of advice. Their role is just to carry out any orders you give them

Types of accounts

When trading you can have two types of accounts, a cash account and a discount account. A cash account is one that requires that you have money in it. This also means that you can only trade for the amount that you have in your account. A margin account on the other hand is one that requires that you have the cash up front. However, you will be able to borrow up to twice the amount that you have in your account. You have to borrow from the broker to buy and this amount that you borrow will be on interest. The amount of interest paid will vary from one broker to another. For collateral, the stock itself will be used.