One advantage that the stock market offers over other businesses is that you do not have to find the suppliers of your products and also the customers to buy them. You have ready suppliers and buyers of stock not only during the regular stock exchange working hours but even after the working hours. You can buy and sell the stock online immediately sitting in front of your computer in the comfort of your home.
If you are new to stock market trading, here is the ABC of buying and selling the stock online.
Most stock brokers have a special page on their website that is dedicated to buying and selling of stocks. Or, there may also be a pop up window for taking orders.
You are provided buy and sell options and you can click upon what you want to do.
When you want to place a BUY order, you have to determine the number of shares you want to buy. This can be done by the following method:
?Decide the total amount of money you want to invest in a particular stock. ?Check the current price of a share of that stock. You can use the Last price or the Ask price option. ?Divide your total investment amount by the current price of the share and you get the total number of shares that you can buy. For example, if you want to invest $1,000 in a certain stock and the cost of one share $10, you can buy 100 shares.
Generally the price of one share is not as simple and round as $10. It is usually +/- a few cents. So the number of shares does not come exactly in round figure. You have to adjust and round up your total investment amount by multiplying the number of shares by the price of one share.
If you want to buy an expensive stock say which costs $500 per share, the process of rounding up makes a pretty big difference. More over, you must also be aware that stock prices keep changing almost every moment, so your actual total investment amount may slightly vary from the predetermined amount when your order is executed.
Selling your stock is much easier as you know the number of shares you own. You have only to decide the price at which you want to sell you stock. Be quick in making your decision about the sell price. If you keep dithering, the price may change for better or worse.
Also be sure to check your portfolio or account page about the number of shares you have. You may at times be surprised to find that the number of shares of a stock you bought some time back has changed. The number has possibly increased and the price at which you had bought it has decreased.
Although the companies generally keep their investors regularly posted about the important policy changes and decisions taken during the periodic board meetings, still you may have missed out on some important announcement which may have important impact on your share holding.
The company whose stock you have purchased may have decided to split the stock in a certain ratio. For example, you may have been allotted as many more shares as you already have.
If you hold 20 shares, you may find that you have 40 shares in your portfolio. While you may be pleasantly surprised at this sudden windfall in your bag, you may also be equally surprised that the price of your share has been almost halved to what it was a few days ago.
Of course, the total value of your holding remains unchanged depending upon the market price per share prevailing at that time. A stock split is like getting two five dollar bills against one 10 dollar bill.
The reason why companies split the stocks may be to bring about a change in the perception of the investors. Some times, the stock price goes so high that an average investor considers it out of his reach. A stock split reduces the price per share so that it appears more affordable to the smaller investors. In fact the same investor could have bought the stock at pre-split prices, but the appeal of buying a $60 stock at $20 is irresistible.
Therefore check your stock holding from your account portfolio when you want to sell your stock. Even if you are not aware of the company's decision to split the stock, your stock broker may have incorporated the change of shares in your portfolio.
With the invention of the Internet, trading process has also changed dramatically. Now, the process is so easy that you can buy and sell stocks right from your home or office. What you actually need is a PC and an Internet connection. Simply click few mouse buttons and you are done. Unlike traditional brokerage system, you do not need to pay hefty commission rates to your broker any more. Now the reluctance of investing in the stock market has gone away and investors are willingly to show their interests in this kind of trading system.
Since investment is done for profits, online trading system is the best platform for everyone. But, the trading process is very crucial for investors. If you know how to trade ? when to buy and sell stocks, you can gain maximum profits in the share market. Below are some important fundamental tips mentioned ? follow those tips and make your trading process more successful and profitable.
Buy and sell stocks on time: You buy company shares and become a part of that company. Now the growth of the company is directly related to the share prices and the profits you can make from trading. Therefore, it is important to buy stocks from leading companies. And even if you buy small company shares, you need to check out the growth pattern and the previous company records. Again, you need to sell stocks on time ? since the market is a volatile entity, you should always keep in touch with the market ? consult with online broker and also keep you abreast of the market news updates.
Market analysis is a must: To understand the volatile nature of the market, you will have to do the analysis of the market. Thanks to the Internet that has made the process much easier than ever before. There are some advanced analysis tools available on the company site ? what you have to do is feed some important data and analyze them in no time.
Stock quotes: There are several basic terms, which are frequently used in the trading process and one of the most important terms is the quote. It is a statistical chart that allows you to retrieve the information about the share prices. You can see your company shares and the price fluctuations. Many investors don't even know how to read the chart therefore fail to analyze the share prices. Therefore, it is inevitable for every investor to learn these basic things first and then start trading online.
The trading company website: For online trading you need an account on the company website. Choose a company who could offer best services and charge less commission rate. Once you open an account, you can access a wealth of information from the company website. Read articles, blogs, and reviews and analyze the market using advanced tools. Always keep these important points in your mind and trade intelligently. It is right that the share market is volatile in nature, but once you understand the market, you can easily manage these subtle things. The most important thing is your planning and the strategy you apply in trading stocks. So, if you really want to live your life without worrying about money then start investing from today. Consult with people who are already investing in the market or you can consult with online financial experts for the same. But invest and build a good financial backup for future.