| Before you jump into buying stocks you'll need to | | | | (which is a popular way to trade in 2008). For |
| know how to place a trade. Placing the trade is easy, | | | | example, XYZ is at $50 a share. You think the stock |
| getting the best price could be a different story. | | | | is going down so you sell the stock and get $50 a |
| When you are ready to buy or sell a stock you log | | | | share for each stock you sold. This sounds like free |
| into your brokerage account. You can also call in your | | | | money. You sell 100 shares you don't have for $50 |
| trades to the brokerage firm but they will charge a | | | | each and you get from your broker $5,000 put into |
| lot more, AND you may not get the best price. Once | | | | your account. Do that every month and you have a |
| logged in you go to a page designed for placing your | | | | nice income correct? Not quite. |
| trade. You enter information such as the stock | | | | In reality, you have to borrow shares from your |
| symbol, how many shares you want to trade and | | | | broker in order to sell them to someone else |
| whether you are buying or selling. | | | | (remember, there is always another trader on the |
| If you don't already know this, you can BUY stocks | | | | other side of your transaction). Eventually your |
| (and you hope the price rises so you can make a | | | | broker will want his shares back. At that time you will |
| profit) or SELL stocks. When you sell, you could be | | | | need to buy the shares back. If the stock went |
| selling stocks you own to lock in a profit or to exit a | | | | done in price to $30, you just pay $3,000 to buy |
| trade gone badly. In addition to that, you can also sell | | | | them back and keep your $2,000 profit. On the other |
| stocks you don't have! Therefore the brokerage | | | | hand, if the stock goes up to $60 instead, you need |
| company needs to know if you are selling your | | | | to buy back at $6,000 and take a loss of $1,000. |
| stocks or selling stocks you don't have. | | | | As you can see it is possible to make money on |
| The reason you would sell stocks you don't own is | | | | stocks whether they go up or down. |
| to make money off of the drop in price of a stock | | | | |