Introduction to Stock Trading - A Few of the Basics

It is important to learn a few basic things about stock investment before you start trading.

The most basic investment strategy to make money is to Buy Low and Sell High. It is always best to buy stocks at a lower price and sell them when the price goes up. However it can be difficult to determine whether a stock's price will go up, down or sideways.

Stock trading can be done through a stockbroker who will probably charge you certain commission fees. A broker may be employed by a brokerage company. You may need to find a low commission stockbroker in order to actually make money in the stock market. One of the options is to find a discount brokerage firms to buy and sell stocks over the Internet. A discount brokerage firm is cheaper than the full service stockbroker but providing clients with little or no investment advice. Some of the best discount brokerage firms include E*Trade, TD Ameritrade, and Interactive Brokers.

There are two basic types of stocks: common stock and preferred stock. Common stocks (or ordinary shares) represent the basic units of ownership and the shareholders are deemed as the members of the company. They have the right to vote in the company meeting, and each share of common stock is entitled to one vote. Some companies also issue other classes of shares like the preference shares (or preferred stocks). In contrast to common stocks, preferred stockholders do not enjoy any voting rights.

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