Learn to Make Money by Online Stock Trading – Understanding Stocks

Online stock trading is one of the effective ways to make money.  Before starting this business you have to understand about the basics of stocks and strategy of trading. A stock can be described as the capital rose by a company or a corporation from the issuance of shares. Shares of stock can be easily said to represent the pieces of a business.  If the total value of some business is 100000 units, each unit can be called a stock.  Every unit holder partly owns the business.  If you own stock in a company, say IBM that would make you a shareholder of IBM. 

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Categories of Stocks:

Mainly stocks are categorized into four: common stock, preferred stock, duel class stock and treasury stock. 

• Common stock is the most common kind of stock available and the ownership of common shares usually comes with some voting rights.
• Preferred stock is different from common stock in the sense that they usually get paid more dividends and usually come with extra rights and decision making abilities for the company.
• Dual Class stock is a combination of the previous two kinds of stock and the rights attached to each share vary.
• Treasury stocks are shares that were once issued to the public, but have since been bought back by the company.

In a stock exchange such as the New York Stock Exchange, millions of shares change hands on a daily basis. It doesn't matter if you invest in shares of stock of multi-billion dollar conglomerates or tiny publicly traded retailers, when you buy share of stock, you are purchasing a tiny piece of a company. 

The stock market is nothing more than an auction. Individual investors are making decisions with their own money in a real-time auction. If investors thought a particular company is going to grow its profits faster than other companies, they would be willing to bid up the price of the stock (which is affected by supply and demand because there are only a fixed amount of shares in existence). Likewise, if a large investor were to sell his or her shares in the market, the supply could temporarily devastate the demand and drive the stock price lower. 

If the company is large enough, you could trade on a stock exchange. That's what is happening when you buy or sell shares of a company through a stock broker. You are telling the market you are interested in acquiring or selling shares of a certain company and the broker matches you up with someone who wants to buy/sell his stock at your price and take his fees and commissions for doing it.

Success in online stock trading business is the capacity to take right decision at right time; that is to buy or sell stocks after understanding the market.  For this, better knowledge and capacity to analyze the market trend is required.  Your stock broker will be a great help for you in these matters or you can get guidance from experts.  Wise decisions and not emotional deeds are the keys to make money in stock market.  That is why you see many successful investors are completely unemotional about stock market crashes; they view the events as nothing more than the opportunity to buy a greater stake in businesses they like that generate lots of cash. 

Click here to get more information about the real time tips for doing successful online stock trading.

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Money Making by Online Stock Trading

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