Contact CBJ

The ABCs of Trading a Stock

By California Business Journal Newswire Division

Here are the basics of trading stocks: What stocks are, how they work, and some of the terminology you will need to know to trade them successfully.

When you own shares in a company, you are entitled to part of that company’s profits or assets. For example, let’s say you own shares in Apple Inc.

If Apple makes $100 million in profit this year, you may be entitled to a portion of that depending on how many shares you own. Alternatively, if Apple decides to sell some of its assets, you may be entitled to a portion of the proceeds from that sale.

How Do Stocks Work?

Now that we know what a stock is, let’s discuss how they work. When you buy shares of a company, you essentially purchase a piece of that company. You become a partial owner of the company and are entitled to its profits or assets.

There are two types of brokers. We’re talking about full-service and discount ones. Full-service brokers provide their clients with research, advice, and other services in addition to buying and selling stocks. Discount brokers simply buy and sell stocks on behalf of their clients.

How Can You Start Trading?

Now that you know the basics of stock trading, you’re probably wondering how you can get started. The first thing you should focus on is finding a reliable broker. A broker is a company that will buy and sell stocks on your behalf. They will also provide you with the tools and resources that you need to trade successfully.

Stock Prices

The price of a stock is determined by movements in a particular market. The more people that want to buy a stock (demand), the higher the price will be. The fewer people that want to buy a stock (supply), the lower the price will be.

This is why it’s important to do your research before buying or selling any stocks. You need to make sure that you understand what you’re buying, and why the stock price is moving the way it is. Purchases are made through different types of stock orders. However, when you need to research before you can make a proper decision.

Disclaimer

Stock trading can be a great way to make money and build your wealth. However, it is essential to remember that it is also a risky activity. Before trading starts, make sure you understand the basics and do your research.