Things You Should Know About Stock Trading

By Ispas Marin

If you consider the possibility of trading stocks, there are
some things you should know from the start. The first thing you
should know is what exactly stocks trading mean. Well, first of
all, stock shares represent a way companies raise capital for
their business. A company issues new stock share, people buy
them and the money goes into the company’s bank accounts to be
invested in the company’s business. The public has access to
these stock shares through a stock broker who is selling and
buying them. One thing you should always keep in mind when you
start buying shares: their price is constantly changing based
on supply and demand balance for those shares. When the supply
is high, the price falls; but when the demand is high, the
price is going up. This is the golden rule of stocks trading. A
raise of price brings money to your pockets.

Stocks trading have changed lately due to technological
evolution. Internet has eased the selling and buying process.
It is now possible to sell and buy shares instantly.
Consequently, the stocks trading process has changed as people
chose to sell and buy more often instead of just keeping the
shares as they used to do years ago.

Stocks trading are a process that presents both advantages and
disadvantages.

First of all, the profit is bigger when you are constantly
trading your shares portfolio instead of just keeping the
shares for years. There is a huge amount of shares available
for buying on the market. But be careful, not all shares have
price moving up. You just have to dig up and find those shares
whose prices are bringing you profit.

If you don’t know what company’s shares are better to buy, you
can always go for popular companies as Microsoft or IBM. They
always bring a sure profit.

Leverage is stocks trading biggest disadvantage. This means
that if you have a margined account, the maximum leverage you
can get is no more than 4:1. Forex trading and even futures
trading offer better deals than stocks trading. Another
disadvantage is the fact that a trader who is doing more than 4
trades in a 5 days period is required to hold at least $25, 000
in his/her trading account.

The uptick rule represents another disadvantage of the stocks
trading process. You are required to wait for the stock price
to tick up before you are aloowed to sell it.

Another big disadvantage is the cost of stocks trading.
Although the costs for online trading are low, they still count
quite a lot at the end of a trading day.

In conclusion, stocks trading are a process which has its
upsides and downsides as any other trading method. The best
thing for you is to choose the kind of trading you consider is
most suitable for you. But keep in mind that all trading
processes (no matter if they are forex trading, future trading
or stocks trading) have both advantages and disadvantages.

About the Author: For a Stock Trading system and investment
strategy that is simple and easy to follow just visit
http://www.mytradingsystem.net Portfolio management strategies
that work in all types of stock market.

Source: http://www.isnare.com