Trading Stocks Has Never Been So Easy With These Important Factors You Need To Follow!

It's easy to buy stocks

It's easy to buy stocks. What's not so simple is to buy stocks now -- and then sell later for a profit. Knowing when to buy or sell is a skill that takes more than just one article to learn. But if all you're looking for is a lesson in how to buy and sell stocks, then invest some time and keep reading!

Most important -- what is "stock?" Stock usually takes the form of shares, which in turn represent ownership of a corporation. Another term used for stock is "equity." In effect, when you buy shares of stock or equity in a company, you own part of it. It may seem that your share of the corporation is small, even insignificant. But you are still entitled to a part of the earnings and assets.

All stock transactions -- both buying and selling -- must go through an exchange. An exchange can be defined as an organization that provides the facilities to buy and sell stocks, options, bonds and futures. Before you can buy stock, you must be a member, or have what is called a "seat" in the exchange. However, a seat on an exchange can run into the millions. So for most of us, buying one is unrealistic. But buying and selling stocks can be done another way. The alternative is to use a company that already has a seat on the exchange.

You can expect certain rights and privileges if you own stock. If you want, you can buy more shares. You can sell what you already own, or you can transfer it to someone else. Stock ownership often means you'll also have the chance to vote on corporate issues. But your vote will also most likely be limited by the amount of stock you actually own.

You should also receive notices whenever corporate changes are made. It's your right as a shareholder to be informed. And there's the subject of dividends. The board of directors can decide to pay its shareholders in cash or stock dividend. But it also depends on whether the corporation makes a profit and has money to spend.

Common Stock and Preferred Stock are the two principal kinds of stock you'll find for sale.

You'll quickly find that Common Stock is the most popular kind of stock traded. As an owner of common stock, you are entitled to a share in the risk and reward of the company; if the company's stock value increases, your stock will likewise increase. There are two types of dividends: cash or stock dividends. But you'll only receive them if the company pays dividends. Voting rights usually come along with common stock. You will be allowed to cast your vote on management decisions and corporate policies through a proxy.

You can expect a few additional perks with preferred stocks, along with a share in the corporation. Dividends are paid first to preferred shareholders, then to common shareholders. If the corporation goes out of business, preferred stockholders may be able to recoup some of their losses. Creditors are paid first. Any remaining assets go to the preferred stockholders. This means the preferred stockholder of a company that's gone out of business would get paid before a common shareholder. The downside to preferred stock is that it does not go up in price as would common stock. And if you're concerned about having a voice in company matter, don't opt for preferred stock. It does not come with voting rights.

Opening a stock trading account is your next step toward buying and selling stocks. While you're searching for a broker, keep your eyes open for what is called a "discount broker." And if you're looking for even cheaper commission, search online for something called a "deep discount broker." And finally, don't forget to research a few brokers before picking one. Good luck!

by: Gen Wright

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