Stock Trading - the basics

To trade stocks is to BUY or SELL stocks or shares in order to profit from the sale. It is ideal situation to buy the stocks/shares when it is at a low price and sell it when the stocks' value goes up. The risk comes in because often it is difficult to know whether the value of the stocks/shares will go up or down !

In order to make a prediction, stock traders will read the Company information and inquire as to its performance in the recent months as well as the general pattern of the stock values.

Stock trading may be done through a professional stock broker or by the buyer him/herself. It depends on your level of expertise and or trust in someone else. Some people choose to do their own trading so as not to pay a large fees on each trade.

Depending on the level of stock market in general and of a traders' particular stock, a lot of money can be made ... or lost. When education and experience meet up, a fortune can literally be made from buying and selling or "trading" stocks.

There are two types of stocks : common and preferred. The common type of stock is ownership in the company without the benefit of voting rights. These stock is less expensive and carries less privilege. On the occasion of bankcruptcy, these stock holders are the last to get paid - if they receive payment at all !

Preferred stock is ownership in the company that comes with voting privileges. One piece of stock equals to one vote. The more preferred stocks owned by an individual, the more votes they will be able to use. While preferred stock holders are paid before the common stock holders, they too have to wait until all the creditors are paid off in the event of bankcruptcy.

Stock trading itself is very straight-forward. It is advisable to educate yourself on stock trading and not just rely on the stock brokers !