Thursday, November 15, 2012

Understanding The Basics Of Stock Trading

Let's try to simplify something a lot of people, including myself, have difficulty understanding: the stock trading strategies market. The stock market, also termed the equity market, is a place wherein different companies buy and sell their stocks, bonds and derivatives at an agreed price. Take note, the stock market is not a place you can pass by or visit, but a complex network of transactions between the brokers and the companies who are trying to make or sell their investments.

The stock market is incredibly vital in our world today for it helps companies get the capital they need by matching them with investors seeking for their share of ownership of the company. This act of selling or buying stocks in the language of finance is referred to as stock trading.

The buying and selling of stocks can be executed on the exchange floor and through electronic markets. When people hear the words stock market, the image that usually comes to their minds is that of the exchange floor. As soon as the market is open, people pour in, talking on their cellular phones and yelling out to one another. Through this chaos, floor traders, members assigned to work under a certain commodity exchange, search around in an effort to sell or buy stocks from others. Here is how the stock trading mechanism works. When you want to buy a share in the market, the first thing you do is call your broker who sends your order to a floor trader. It is then this floor dealers job to go to the exchange floor and seek another floor dealer interested in selling stocks. When the two meet, they talk about the price and the first flood trader calls back your broker. Your broker then calls you back about the price and if you deem it suitable, you earn part ownership to the company whose shares you bought.

The example given is one of the most basic types of stock trading that taken place on the exchange floor. Stocks and bonds can be bought and sold through electronic manners as well. Here, a vast array of computer networks is put to use to match buyers and sellers. The electronic stock market still makes use of brokers, for only few individuals have access to the electronic market and its works.

Not a lot of people truly understand the goings and takings that happen all over the free stock picks market. I therefore advise any of your who are interested in selling or buying stocks and bonds to consult your accountant or broker before you do anything else. By following the advice these professionals give you, you may soon see the fruits of your investments.

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