Trading - Stock Trading Basics

Are you fascinated by the stock market and its potential to earn you lots of money

, but scared that you still don't really know enough about how it works to start investing your money? Are you looking for a new way to build up your financial worth, but are tired of savings accounts that take years and years before they really earn you any interest? Stock trading is a complicated process with a lot of moving parts, however, once you have a firm grasp of how it works, it can be a viable way to make your money work harder for you.

The first thing that you should know about stock trading is that although the word trade is used, it is inaccurate. You don't trade stocks the way you exchanged baseball cards with your friends in elementary school. Trading actually means to buy and sell, or more accurately, to trade stocks for cash. It might surprise you to learn that also unlike your school day baseball card trades, there are millions if not billions of stocks bought and sold on a daily basis, and it is only through sophisticated tracking and accounting systems that we are able to keep track of it all.

Now that you know that stock trading it actually stock selling, it's important to point out that there are two different ways in which the trades can actually take place. The most common and traditional way to trade a stock is to stand on the floor of the stock exchange and shout out your offer to a group of interested traders. You can also do this through a representative of your bank or investment firm. However, more and more people are moving to electronic trading in which an electronic brokers offers and sells your stocks to the highest online bidder.

As you might imagine, the success of failure of your stock trading depends entirely on the ability of your trader or electronic broker to find people that are willing to pay more for your stock than you did, or they have something that they are looking to sell that is more valuable to you than what you already have. These trades can be very complicated, and they depend entirely on supply and demand to determine the price of a stock on any given day. If you are considering making your first investment or trade on the stock market, it's a good idea to see the advice of a financial advisor.

by: Troy Truman

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