Online stocks trading is buying or selling shares of the corporation which is register by Stock Exchange Market, it’s not global as forex.
– It’s less profitable and less risky, it’s not possible to lose all money you invest and it’s not possible to lose more than what you invest, and trading is not 24 hours. But when you own a share of a company, you are a part of it.
What is Stock?
A share of stock is the smallest unit of ownership in a company. If you own a share of a company’s stock, you are a part owner of the company and you can vote on members of the board of directors and other important matters. If the company distributes profits to shareholders, you will likely receive a proportionate share. But if the company loses a lawsuit and must pay a huge judgment, the worse that can happen is your stock becomes worthless.
Two Types of Stocks
Common Stock, It has the right to vote, the right to share in dividends. Common stocks goes up and down and it’s the majority of stocks held by the public.
Because of common stocks high Liquidity most of the larger companies trade daily creating an opportunity to buy or sell shares and make its traders living.
Preferred Stock Preferred stock has fewer rights than common stock, except in dividends. Companies that issue preferred stocks usually pay consistent dividends.
Preferred stock is better for current income from dividends, so the more the companies make big profits, the more you get via dividends using preferred stock. If you want to buy preferred stocks look for companies makes a big profit.
How Stocks Traded
Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor like The New York Stock Exchange, NASDAQ, and local exchange markets in each country. You’ve probably seen pictures of a trading floor, in which traders are wildly throwing their arms up, waving, yelling, and signaling to each other. The other type of exchange is virtual, composed of a network of computers where trades are made electronically.
1. Using a Brokerage
The most common method to buy stocks is to use a brokerage. Brokerages come in two different flavors. Full-service brokerages offer you (supposedly) expert advice and can manage your account; they also charge a lot. Discount brokerages offer little in the way of personal attention but are much cheaper.
2. DRIPs & DIPs
Dividend reinvestment plans (DRIPs) and direct investment plans (DIPs) are plans by which individual companies, for a minimal cost, allow shareholders to purchase stock directly from the company. Drips are a great way to invest small amounts of money at regular intervals.
Making Money by Online Stocks Trading
As we said that trading stocks can make you money by buying stocks on low price and selling on high price, or by buying dividends and share the companies their profit in fix rate or depends on the amount of money gained.