Trading Stocks: Where to begin
You may have an idea how the stock market works and how you can earn money from it. You may also have a pretty good idea which stock to buy and how long before you sell it. You’ve prepared the money, set your investment goals and the only thing missing is buying the stock itself. What do you do first? Do you just barge into the New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX) or even the NASDAQ (National Association of Securities Dealers Automated Quotations) and just start buying? Or is there a process that you have to follow in investing your money into stocks? To answer these questions I have prepared a short introduction on how you can start buying your stocks, trading them and eventually earning those big bucks.
Full Service Brokers
The first thing that you got to know if you’re planning in buying stocks is that there are people called brokers that help you out in buying and selling those stocks. There are two kinds of brokers that help set-up two different kinds of accounts for you. They cost very differently too. The first type is the full service broker. This is a more personal, more intimate kind of broker. The full service broker requires you to either meet with him at his office or at a service center or send his investment representative to your house. They then ask you about your financial details relative to your interest in trading stocks. Questions such as how much is your income, how much are you willing to invest, how much available cash do you have, what properties do you own, what are your investment goals, how much risk are you willing to take, which kind of investment strategy do you want to pursue are asked. The full service broker asks you these things because he needs it to assess your financial situation. In order to give good, sound investment advice, the broker needs to know how much you are willing to risk and what your expectations are investing. The full service broker then contacts you if he thinks a viable stock is being sold. He advises you on which companies to invest, when to buy stocks and when to sell them. You are free to accept or ignore his advice. Full service brokers are good because they are more personal and they assist you in investing. However, this kind of broker also asks for a bigger commission than the other kind of broker. This might eat up your profits.
Discount Broker
The other kind of broker is the discount or online broker. Unlike full service brokers, the discount broker charges less commission. They also do not meet you face to face or give any advice on trading. Discount brokers do not ask for any of your financial information. They just allow you to trade if you have at least $1000 in your account. Experts suggest that you try the discount broker first because this costs less money. You can see how it goes and just research trading tips and recommendations online. This way you get most if not all of your profits.
Stock exchange and investment can be intimidating if you don’t know what to do and where to start. I hope that after reading this, you can start trading and earning.