• Share Trading

    Share trading has been around for centuries and today we’ll look at tips and strategies to profit from share trading. The word share has all but been replaced by the word stock. A share is actually a unit of accounting of many investing instruments, such as: stocks, mutual funds, partnerships, and REIT’s.

    When you own a stock in a company, you actually own shares or units of accounting of the ownership of that company and when you actual purchase the stock this is known as share trading.

    Goals Everyone Agrees On For Share Trading

    A share of the company is issued in the form of a stock certificate (or digital representation of same). When that company decides to publicly trade shares (allowing the general public to purchase part ownership) you can buy shares of the stock from the stock market through various share trading programs. When you sell those shares, you are hoping to receive more than you paid and thus make a profit. Therefore, you have made a capital gain. If you sell for less than you paid, you suffer a loss. Therefore you have a capital loss.

    The price per share of a company’s stock is representative of what investors in the market believe the stock to be worth, and that is not necessarily what the company’s reports and records reflect (such as financial status and earnings). All sorts of information and speculation is meshed to form the bid and ask prices to arrive at a current price of shares of the stock. Share trading isn’t necessarily easy – but it doesn’t have to be difficult either.

    How Do You Actually Begin Share Trading?

    The conduit by which you and I purchase or sell shares in a company is a broker, who is a licensed member of the stock exchange. But unless you are really in the “big-time,” everyday investors deal with sub-brokers. Brokers usually have groups of “sub-brokers” who work with individual investors for share trading purposes. Sub-brokers are the bridge to the main brokers who deal directly with the floor of the exchange. Your order to buy or sell shares goes to the sub-broker, who sends it on to the broker, who executes a trade on the exchange.

    • Active Shares

    “Active shares” are defined as being traded frequently in the day-to-day dealings of a company. These companies lead in their industry, are frequently in the news, and their financial status is subject to political events. Thus, share trading on these companies is active, which of course makes the price per share volatile, with sudden price fluctuation. This creates your chance for greater profits, but it also increases your risk for large losses. Some experts define active shares as those easily traded at least three times a week and these make up the bulk volume of share trading.

    A not so frequently traded share is classified as “partly active.”

    • Public Trading

    When that company decides to “go public,” shares of stock in that company is made available to primary market investors in what is known as an initial public offering (IPO). From that point on, owners of the IPO shares can trade those shares to others through specialized means of share trading.

    Since the stock market was first developed, the ways of investing and share trading have changed in that it is much more complicated now than before. Along with the complexity comes the need for regulation. Constant vigilance and oversight has allowed investors to exchange shares safely and securely.

    • Difference Between Investor and Trader

    You might not know that there is actually a difference between an “investor” and a “trader.” The biggest difference is the length of time the trade is held. If you are mostly interested in long-term appreciation of your shares, you are an investor. If your interest is focused on short-term price movement to capture gains, you are a trader and most likely a professional at share trading.

    Investors depend more on fundamental analysis and long range market predictions. They have what has come to be known as the “buy and hold” mentality, especially if it’s in a company that you care for in some personal way.

    Traders sometimes are in and out of a trade before their coffee has a chance to cool. They like to scalp trade (scarfing off a short quick gain) and do it as often as necessary to profit from share trading. For many, trading is a full time job and there are some so skilled and you cannot even see their fingers move to execute that trade. They are in and out before you even adjust your chair and define what is meant by day trading.

    Of  course, if you are like me, you are more interested in your results rather than what you are called. And, so long as the company operates in a moral fashion, I don’t care who it is. I trade or invest (whatever you choose to call it) for one purpose, and that is to make money … period. Share trading is an enjoyable and profitable venture if done correctly.

    © 2011, www.daytraderoptions.com. All rights reserved.

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