Playing the Stock Market: What to Know About Trading Stocks

How to Get Started

If you are interested in investing as a way to grow your wealth, there are many things that you should know about the topic. For instance, you will need to know what a stockbroker is, what the stock market consists of and what types of brokers are available to you. You may also want to learn the difference between a stock, a mutual fund and an ETF prior to putting your money into the market.

What Does the Stock Market Consist Of?

The market is more than just individual company stocks that you can buy or sell. There are exchange traded funds (ETFs) which are a bundle of stocks, bonds or commodities that try to mirror an index or a broad segment of the market. In some cases, an ETF may attempt to get double or triple the return of the market by using leverage. Mutual funds may also be traded on the market as well as commodities such as oil, gold and silver. It is also important to know that there are many exchanges both in the United States and other countries throughout the world.

How Do You Buy and Sell Stocks?

To buy a stock, you will send a purchase order to your broker, which may be an actual person or just an online clearinghouse. A purchase order can be a market order or a limit order. A market order is an order that fills at the current market rate. A limit order is an order that only fills at a specified price or price range. If the order is above or below that price, the order will not be executed. To sell a stock, you simply execute a sell order at either market rates or at a specified price.

What's the Role of a Stock Broker?

If a broker is an actual person, he or she may act as a liaison between you and the exchange. In some cases, he or she may provide advice about different stocks to buy or sell or other advice that could help you grow your money. A stock broker will also oversee your account to make sure that you have enough money to fund your trades.

While the market may seem like a complicated place to venture into, you can learn to understand it over time. Once you have the basics down, you can start to make strategic trades that will help you create financial stability for yourself and your family.