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