As a new investor, there are many stock trading basics that you need to educate yourself on, Since there is no guaranteed return on your investment, it is important to know as much as possible about the stock market before you get started. Sure, there are times you may be able to sneak your way through a successful trade without learning the stock trading basics, but your luck will eventually run out.
There is no magic formula for making money by investing in the stock market. However, understanding the stock trading basics through proper education and training can help lower your risks while maximizing your gains.
If you would like to understand more about some key stock trading basics, keep reading for more FREE information.
Stock Trading Basics you Need to Know
If you are new to investing in stocks, or just haven’t placed any trades in a while, here are 5 fundamental stock trading basics you need to know. Without an understanding of these critical terms, you are better off putting your money in a high yield savings account.
- Stock Ticker Symbol – Every security and option that can be traded must have a stock ticker symbol. Think of it as the stocks social security number only not as private. Ticker symbols are unique for every security and is always required when placing any type of trade. There are plenty of stock trading basics you need to understand, buy ticker symbols are probably the most important.
- Action & Order Type – Another important stock trading basic to learn is the difference between the action of a stock market trade and the order type. The action typically refers to the kind of trade being place. Are you buying or selling? There are a few other more complex actions, but buying and selling are the basics. An order type on the other hand refers to more specific details about the buy or sell order. For example, you may want to place a “market” order which typically immediately gets placed. On the other hand, a “limit” order allows you to set either an upper or lower limit on your trade (depending on the action).
- Quantity – One of the easiest stock trading basics to understand, every buy/sell transaction must have a quantity associated with it. This is the number of shares of a stock you are planning to purchase or sell. Without it, there would be now definite way to tell how many shares have been exchanged between traders.
- Conditions – Are there any special conditions or time constraints that you want to place your trade around? A critical stock market basic, adding conditions to your trade may be something necessary to complete. For example, if you want to only place your trade on the given day, you can specify that special conditions. There are several other different conditions that you can add to a trade, so be sure you understand them before using them!
- Type of Trade – The type of trade refers to how you plan to finance the transaction if you are buying, and receive the funds if you are selling. The two most common types of trade are “cash” and “margin”. The type of trade that you will make will probably depend on your account that you have setup with your online discount broker.
Stock Trading Basics Review
The list of stock trading basics listed above are just a few of many pieces of information you need to know to be a successful investor. Those key concepts are centered around placing a trade. There are plenty of other important concepts you will need to understand outside the average trade. Research such as fundamental and technical analysis is another set of stock trading basics that are important to recognize.
If you are still interested in learning more about the stock market, try finding a stock simulator or practice tool that can help your learn the basics. There is no reason to gamble your money away while trying to learn the stock trading basics. Playing with fake money is so much easier than losing the real stuff!