Stock Market Investing Basics
If you are interested in stock market investing, you may need a bit of information to get you started. Here are some of the basics:
There are various ways to get involved in trading stocks. You could try using a broker. You would most likely want to do so if you are purchasing publicly offered stock. You could also do the trades by yourself. This could prove to be difficult, since the stock field is one that is highly regulated. There are also licensing and registration regulations that the companies have to adhere to in order to be traded publicly.
This is why it is often recommended that you hire a broker to make stock trades because they can help you understand all the details of stock market investing through stock trading.
Stock trades occur at places called stock exchanges. They are a meeting place where buyers and sellers can get together when they want to make purchases and sell securities. The most popular stock exchanges among investors are the American Stock Exchange and the New York Stock Exchange. However, there are smaller ones though which offer the same things that these ones do as far as trading and capability. What this says is that while larger companies will be listed at multiple exchanges, the smaller ones are probably only going to be listed on a local level.
The impression that most people have of a stock exchange is that it is noisy and chaotic. This is mostly true; however it is an organized chaos with a system in place. The stock price pretty much fluctuates depending upon supply and demand within this system. There are brokers and specialists who go back and forth between the buyers and the sellers. Whoever manages to throw in the highest bid is going to receive the share.
People get representation from brokers, and there are several different versions of them. Full service brokers end up doing much of your trading in your place. You basically just place a phone call and tell them what to do. They do all the trading for you, and you end up with part ownership of a company. When all is said and done, the full service broker has saved you quite a bit of time in taking care of most of your stock market investing needs. The first thing that happens once you leave your order with your broker is that he or she will make sure the proper department receives it. This department will then forward it to the brokerage firm's clerk. The clerk is actually on the same floor of the exchange where the target shares are offered.
Then the floor trader gets the order. What they need to do is locate a broker who can get them the shares you want. Then they will negotiate until they come to an agreement on a price, and this completes the order. There will be a message that follows the same chain of people all the way back again until eventually it reaches you.
The whole stock market investing process described here is typical, but in essence it can also be cut down significantly by networked computer systems.
Article Source: FxTradingStock.com
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by: Joe Maldonado
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Date: Fri, 11 Mar 2011
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