| The stock market is in the news almost every day | | | | There is usually some sort of charge or fee paid to |
| now. If you're new to investing or just want to | | | | the broker to make a stock trade. The full service |
| know a bit more about it, here is a guide to the | | | | broker will typically charge more to cover their |
| stock market for beginners. | | | | greater service. The dawn of the Internet has |
| First, you have to know what the stock is. Stocks, | | | | allowed people to have huge amounts of industry, |
| also called equities, are small pieces, or shares, of | | | | market, and company data at their fingertips. This |
| ownership in a company. Companies sell these to | | | | enables people to do their own research that was |
| raise money for any number of reasons, from | | | | simply not possible 20 years ago. |
| financing large capital purchases to expansion of their | | | | One of the main criteria in choosing a company in |
| operations. Trading ownership in a company for | | | | which to buy stock is to know why you're buying it. |
| money like this is called equity financing. | | | | Are looking to fund retirement that's years away, or |
| Once the company decides to sell shares of itself, | | | | are you trying to make money relatively quickly. |
| there needs to be a place to sell it, preferably a place | | | | Perhaps you need to preserve savings you have in |
| where like minded people congregate to buy and sell | | | | the face of possible inflation. Strong future inflation |
| such shares. That place is called the stock market. In | | | | could be a very real concern as the U.S. government |
| some cases this is an actual, physical place. The New | | | | continues to print and spend money for various |
| York Stock Exchange has an exchange building in | | | | bailout and stimulus packages. |
| New York City. Other exchanges, such as the | | | | Once you've chosen a company in which to invest, |
| NASDAQ (pronounced nas-dak) exist purely in the | | | | you'll need to contact your stock broker to purchase |
| virtual world. | | | | shares. They make the trade for you. You'll be able |
| Stock exchanges exist in many of the world's | | | | to choose from several kinds of orders; you'll place |
| developed countries, with the largest ones being | | | | either a sell or a buy order, depending on weather |
| concentrated in the financial centers. Japan has the | | | | you're selling or buying. There can also choose |
| Nikkei in Tokyo, Britain has the London Stock | | | | weather you want to place a market or limit order. |
| Exchange, and Hong Kong is home to the Hong Kong | | | | A market order is executed at the market price as |
| Stock Exchange. Typically a company will be traded | | | | soon as the trade can be made. With a limit order, |
| on the exchange in it's home country's exchange. | | | | you can set limits on how much you want to pay or |
| Any trade needs two parties, a buyer and a seller, | | | | sell for. If the stock goes above the limit you set in |
| and stock trades are no different. If you're buying or | | | | the case of a buy order, the trade will not be |
| selling shares on any of the larger exchanges, you | | | | executed. This protects you from paying more than |
| won't do the buying and selling directly, you'll go | | | | you want to for a particular stock in the event the |
| through an intermediary called a broker. Brokerage | | | | price is rapidly moving. |
| firms have what is called a "seat" on the exchange, | | | | One of the keys to trading stocks is to know why |
| meaning they are authorized to do actual buying and | | | | you're trading, and choosing the broker that most |
| selling on other's behalf. | | | | closely matches your needs. If you want the |
| Your job is to choose what company you want to | | | | freedom and flexibility to make your own trades |
| buy or sell. This is normally done through careful | | | | when you want to, choose the online broker that has |
| research, either the old fashioned way, or using | | | | the features and level of service you're comfortable |
| sophisticated software. The are nearly as many | | | | with. Pay careful attention to the research tools they |
| schools of though on choosing companies to invest in | | | | offer, and how user friendly their online interface is. |
| as there are companies in which to invest. | | | | You should also check their rates. Look at any |
| There are two general ways you can trade stocks. | | | | monthly fees and their cost per trade. |
| You can have a full service broker that assists you in | | | | Just because you are a novice doesn't mean that |
| determining a company in which to purchase stock. If | | | | you should stay away from the stock market. Even |
| you're more the type that likes to make their won | | | | in a down economy there are is still money to be |
| decisions you'll probably use a discount broker that | | | | made there. After all, many excellent companies have |
| will allow you to pick your own stocks, then buy | | | | seen the price of their stock fall dramatically in recent |
| them through a telephone call or by going online to | | | | months. This means they represent excellent values |
| the broker's website. Either way the broker makes | | | | for the seasoned investor and the stock market |
| the transaction. | | | | beginner alike. |