What are Stocks?
Stock is a type of investment. When you purchase stock, you are buying shares of a company and in a sense, you become a partial owner.
Companies sell shares to the public so they can have extra funds to grow and improve their business.
How Do You Purchase Stock?
In most cases, stock is purchased and traded on stock exchanges such as the New York Stock Exchange (NYSE), the Nasdaq or the Shanghai Stock Exchange.
After a company goes public, shares are made available on the exchange where the stock is listed. Sales can be conducted through individual brokerage accounts (trading accounts) or with the help of a stock broker.
Investment Strategies
Over history, stock has outperformed other types of investments, but a solid strategy is needed to minimize risk. Shares go up and down in value and can be resold. So the goal of the investor is to buy low and sell high. This way, the investor can make a profit from the sale instead of losing money.
Short term investors buy and sell stocks frequently. Long term investors hold on to stock for long periods, hoping their stocks will grow overtime. Long term investors may also have the benefit of collecting dividends when their company does well.
Why do stock prices change?
There are many factors that can affect the price of stock. For the most part, people buy what is popular. It’s important for investors to research the company they wish to invest in to see if it is doing well or if it has potential to grow.
Also, the economy, current events, and the general climate of the stock market will affect the price of the stock. Therefore, a wise investor will do some research before making a purchase or trade.
Understanding how the stock market works, and the ability to read stock charts to do analysis, is key to making wise trading decisions. With the proper guidance, anyone can learn to trade stock.
Curious to Learn More?
Enroll in a Teach Me Wall Street – Investing & Trading Boot-Camp so you can learn to trade with ease, confidence and wisdom.
Click on the button below to view the programs