Learn these stock market trading secrets that the gurus don’t want you to know. Probably stock market trading is the first baby step you take to investing. Buying and selling stocks is about as basic as it gets in the world of trading.
For every stock listed in the market, there are 50 “experts” waiting to tell you what is best for you and why. Well, a lot of what they have to say is good, real good, but when the lights go out, it’s your money and your decision as to what and where to invest.
I love to trade simple stocks and I like to go through the paces of deciding which ones to trade, at what price and for how long. Unlike many other instruments, you will find that part of your stock portfolio will be in long-term “buy and hold” equities and part of it in shorter holding periods, perhaps even day trading some.
Can You Reach Retirement Through Stock Market Trading?
You have to learn the basics, even with stock investing. Just because it’s fairly straight-forward and simple doesn’t necessary mean it’s easy. You want to make more profits than losses, so as with all things, you have to have a plan. Before you can develop that plan, you have to learn some things.
- Here is an overview of some basics.
What Is All That Commotion On The Trading Floor?
I’ve often thought that if a person tuned in CNBC who had absolutely no idea what the stock market was and they saw all that chaos going on, they would wonder if there was a riot in progress or an insurrection. In stock market trading there is so much confusion all nicely choreographed – how marvelous that it works, and works well. For every buyer, there is a seller down in there somewhere, or on some computer monitor somewhere and when it’s time for that trade to make about face, the dance continues. You don’t need to necessary exactly know how it works; just that it works and you are part of what is going on.
Have you ever seen a camera recording the floor after everyone has gone from a long day of stock market trading and there are only custodians down there sweeping up 3 million pieces of paper? The riot is suddenly over and some of the papers are still blowing in the breeze of the quickly departing floor traders. By now they are most likely across the street at Joe’s Pub knocking one down. It was a hard day.
- Companies and the Market
Companies involved in stock market trading list their stocks or shares on various stock exchanges. Did you know that the different exchanges actually battle one another for the business of companies? For whatever reason, if a company attracts stock market trading, then it stands to reason it will make money for the exchange that lists it.
Companies are assigned a trading symbol, known as a “ticker” by which they are known and records of trades kept. If you are going to enter into stock market trading you will need that ticker to place in your order. Current prices and other information flow by on charts and streaming quotes to inform you of share prices. You use that information to decide your trades. It’s not really that simple, but for now it will do.
- Types of Stocks
As owner of a part of a company, you have the right to vote on important matters and also to receive dividends if they are paid, but let’s keep this simple. There are basically two types of shares to consider while stock market trading:
- Common Stock Market Trading
Most stocks held by individual investors are common shares. When you hear news concerning the share price while stock market trading, they are reporting the price of common shares.
- Preferred Stock Market Trading
The major difference between common and preferred stock is in payment of the dividends. If there is trouble, preferred stock owners will get paid first in the game of stock market trading.
- Buyer Equals Seller
If you decide to participate in stock market trading, obviously someone sold it to you. If you buy it you are hoping that the stock performs well and when you sell it you make a profit. If things don’t work out well, well, then I guess you understand what happens.
Here Are Some Tips To Win at Stock Market Trading
Different Types of Orders to Trade Stocks
- Market Order
This is the quickest and most simple way to get your order filled (find your buyer or seller). When you execute a market order you are simply saying you want to buy or sell a specific number of shares for whatever the market price per share is at that moment. While this type of transaction is quick and easy, it is also at the mercy of market volatility. Your trade’s closing price may not be what you were expecting. It is however the least expensive type of stock market trading order with regard to broker fees.
- Limit Order
When you place a limit order you instruct the broker to buy or sell a certain number of shares at a specific price. The transaction will not be completed unless that predetermined price is met. Commission charges are higher for limit orders than stock market trading orders, however, if your order is filled, you get what you want.
Stop Order
- Stop Loss Order
Stop loss orders are a little more complex than your standard stock market trading order, but they offer you some protection. You place a stop loss order with your broker at a price that is below the current market price per share. If the stock price takes a sudden drop, your previously set broker instructions will cause a sell transaction of your shares at that stop loss order price; thereby protecting you from further dropping prices. If stock market trading remains constant, or if the price goes higher, you still own the stock and the stop loss order never triggers. Think of it as an insurance policy you have on the side when stock market trading.
- Trailing Stop Order
This is a little like a stop loss order, but in reverse, in that you place it to protect your profits instead of limiting your losses while stock market trading. If you have already made gains on your investment, you can place a trailing stop order to insure that you keep those gains and make even more if and when the price increases. The trailing stop order will move (trail along) as the price rises, and your stock market trading profits continue to increase.
- Good Till Canceled Order
When you place an order with your broker, regardless of what kind of order for stock market trading purposes, if you place “good till canceled” instructions, then your order will remain active until filled or until you cancel or modify it.
- Day Order
A day order is only good until the close of that day’s business. If your order does not get filled, it is cancelled and if you want to continue in the same manner the next day, you will have to place your order again.
You Can Enjoy Success Trading the Stock Market
Same story, second verse, pay your dues and study before diving head first into stock market trading. Pass up happy hour a couple of times and read about how to maximize your chances to make some sweet profits. Don’t pass up any information that may give you an edge to better performance.
There is a ton of information available to you online that is geared to help you be a success trading the stock market. Be sure to conduct your own due diligence and spend time learning the ropes. With patience and a strong desire to learn you”re sure to do well at stock market trading.
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