Guidelines in stock trading for beginners

Ask people who have recently engage in stock trading and some of them would probably tell you that one of the reasons why they are encouraged to get into this field is the movie, “The Pursuit of Happyness”.

In fact, many people who are in stock trading right now have once or twice thought about going into stock trading. It all look so easy considering you just need to make a few phone calls and meet some people and talk to some high brass firms. It is all about presentation they say. It’s important that you have the know how to say things at the right time. Now for people who are seriously considering stock trading as a career here are some important things you need to know.

1. What are the types of stocks. There are basically two types of stocks available-the common stock and the preferred stock. The type that most individuals hold is called the “common stock”. Here, the trader represents the majority of stock and he or she reserves the rights when it comes to voting people in the management as well as also calls the shots when it comes to share in dividends. The other type is called as the “preferred stock”. Basically, it is the same with common stock only that the traders enjoy lesser rights. But the good thing about preferred stocks is that the traders do not partake in dividends, thus, making companies have more freedom in deciding the trend of the income from dividends. If you are just beginning in stock trading, it would be best to look for companies that have bigger profits on their preferred stocks because it means that they earn bigger dividends, which can give you bigger return of investment.

2. What are “trading stocks.” This is one of the most basic things you need to know. If you are just starting in stock trading, must understand what a stock is, what does trading entails, and how does trading stocks will affect your overall success. Stocks refer to a unit of ownership one has in a certain company. Trading, on the other hand, is the simplest way of saying buying and selling something or a financial tool that is used stock trading. Stock trading simply means that you will be purchasing and selling stocks in the financial market.

3. Understand the methods of stock trading. Experts say that a beginner in stock trading doesn’t really have to have in-depth knowledge of the minute details of how one buys and sells stocks. The most important thing is that he or she learns the importance of knowing the basics so they would know how to execute the stock trading strategies. In stock trading, there are basically two interactions that take place when a trader executes a trade-the first is on the exchange floor and the other one is by using electronics. If one is trading on the exchange floor, there is a need to open the marketplace where thousands of people are speeding up, shouting, make gestures to one another, and in heated discussions over the phones. There are also those who carefully watch the monitors for any changes, and almost simultaneously enter data into each respective terminals. When it comes to electronic trading, the exchange floor might be more chaotic compared to this set up. These days, there is a stronger demand in shifting trading to the networks and off the trading floors. In fact, because of lesser room for pressure, more and more traders prefer this stock trading set up.