When you log into your account to buy or sell a stock (see how to buy a stock), you will have to choose what type of order you want to place. The standard options are "market", "limit", "stop", and "stop limit". Most of the time you should pick the "market" option as that just means you want to get the market price for your stock. In other words, you want what ever price is the going price at the moment you are placing your order.
The stock market for beginners is a hard enough place without trying to get too tricky. When you want to either buy or sell a stock at a certain price that is when you use the "limit" option. Let's say that you have 100 shares of XYZ Corp. and you bought those shares at $20.00. Right now the price of the stock is $24.12 so you do have a gain but you would like a little more. If you can, you would like to sell the stock at $25.00.
Rather than wait all day and monitoring the stock market every 5 minutes, all you have to do is to place a "limit" order to sell your stock at $25.00. That means, if the price of the stock ever hits $25.00 for that day, your order to sell will be initiated and the sale will be made. If the stock does not ever reach that $25.00 mark, nothing will happen and you will still own the stock.
The same can be done on the low side. If you want to sell the stock at no lower than $23.00, you can place your order to sell if the stock goes down and hits $23.00. That way, you will still have a gain and you protect yourself from losing more if your stock continues to drop. Stock market investing is complicated for the beginner because of all the different terminology. Once you learn what all the words mean though, it is not as hard as you might think.
Stock Market For Dummies - Limit Orders
Stock Market For Beginners - Bull And Bear Markets For Dummies
A bull market is when everyone is positive about the stock market and wants to buy stocks. A bear market is the opposite as the stock market keeps going down no matter what and people want to sell.
The stock market for beginners is a place where you need to pay attention to what is going on. During a bull market, you can probably make money from almost any stock. Everyone will want to give you their stock pick and chances are the stock will go up. All the pundits on TV will be pumping out their stock picks and you can most likely make money on any of them. Even your hair stylist may want to give you a stock tip.
If you start investing in stocks during a bull market you may get over confident. You may make money right away and think it is easy. This is something to be weary about if you are just starting to invest in stocks. It is not easy and things can turn around in a day.
During a bull market, everyone wants to sell. The stocks you own may go down 4 out of every 5 days. You will be confused and want to sell and wonder whether you should. Remember 9/11 when the stock market went down huge and kept going down for months after? Do you sell or do you hold? Will the stock market ever turn around? Do you buy more at a lower price? These are just a few of the questions that you will be faced with in a bear market.
Most of the time the market is somewhere in between a bull and bear market. Usually the better stocks go up over time and the stocks of companies doing poorly go down. It is best to always try to pick stocks of companies that are doing well or will do well. The stock market for dummies can be a confusing and scary place that takes a lot of time and experience to get used to.
Stocks For Beginners - When To Sell Stocks
One of the hardest decisions for any investor is when to sell a stock. The stock maket for beginners is very confusing and you are required to make many decisions.
Deciding what stock to buy and when to buy it are also difficult, but before you do you have no stake at risk. Doing nothing does not impact your money either way...you still will have the same amount. Yes, you can feel stressed if you don't buy and the stock goes up but in the end you still will not have lost a dime.
It is different once you own a stock. If the stock is going down, you are losing money. Should you sell and jump off? Should you wait it out? If you have a gain should you sell and protect the gain? If you have a loss should you sell and minimize the loss in case the stock keeps going down?
If the stock is going up you have the same set of decisions. At what point do you cash out and take your gain? If your stock is going up and you don't sell, it may reverse course and go back down erasing your gain. Or, if you sell now, the stock may continue up and you will not make as much as you could of.
When to sell a stock market stock is the age old question that will never be answered. Whatever you do, it will probably be wrong in some time horizon. The best thing you can do is to pick a price you feel comfortable with before hand, and when your stock reaches that point either up or down, you sell your stock. That way you can live with your decision and the stock market for dummies will be a little less stressful.
Stock Market For Beginners And Taxes
Lets say you bought and sold your first stock and made a gain. Please see stock market for dummies. Congratulations!....but you now owe taxes.
That's right, you know the saying "there are only two things guaranteed in life......death and taxes". The IRS want their cut of that gain you just made so be sure to keep all records. When tax time comes you are going to have to fill out Schedule D and report your gain. If you are going to be investing in the stock market you are going to have to keep track of each transaction whether it is a gain or a loss.
Every stock sale you make, including losses, is going to have to go on that Schedule D. If you are going to trade stock, you have to understand and accept this. There is no getting around it as the brokerage companies are required by law to report all your transactions to the IRS. If your records do not match what is reported, this will trigger a red flag and you may very well be audited. If not audited, you will at least be contacted by the IRS and told that your records don't match what was reported by the IRS. Can penalties be far behind?
If you sell stock and have a loss for the year, you can use up to $3,000.00 of that loss. If your stock trading loss was bigger than $3000.00, the amount over that has to be carried over until next year. The stock market for beginners is hard enough before you add in the taxes. Unfortunately, the government doesn't care.
Your Choices For Online Stock Market Accounts.
Stock Market For Dummies Lesson 7 - Most people who own stocks now have a broker account online. Every major brokerage firm will allow you to see your account online and to make your stock trades online. To learn more about stocks and buying them online, please see how to buy stocks online where you will see how easy it is to do.
In years past before the computer, you had to pick up the phone and tell your broker what you wanted him to do. Along with the personal service came higher commissions to buy and sell stocks that in today's online world.
In addition to the major brokers there are online brokers that are very reputable as well. Combined they control and manage billions of dollars and they are all insured by FDIC. Here is a short list of some of the biggest online brokers you may want to consider:
E TradeScottrade
Charles Schwab
Ameritrade
The stock market for beginners is a often confusing so you must do some studying before you jump in. Once you learn a little though, the advent of the online broker makes it easy to get started and make your first stock trades.
STOCK MARKET INVESTING - HOW TO SELL A STOCK
Stock Market For Beginners Lesson 6 - At some point in time, you will want to sell your stock. You will do much the same as you did when you bought stock. Sign into your account and this time find the button by your stock that says "sell".
Fill in the numbe of shares that you want to sell and again pick the option that says "market". Click the "confirm" button a couple of times and you will have sucessfully sold your stock. Again, you should shortly get some confirmation that your stock was sold and at what price.
You will now have completed stock market trading for a second time. Hopefully, you were able to sell your stock for a gain, (in which case you owe taxes on the profit amount) but you also could have sold it for a loss. If you sold it for a loss you will of course not have to pay any tax.
It is important to keep both records of your buy and sell for your recordkeeping and tax purposes. Your broker is required by law to send all trading information to the IRS so you cannot get away without paying taxes on your gain if you have one. The more trades you make, you will have gains on some of your stock market trades and losses on others. This will make your taxes more complicated to prepare but if you want to continue with stock market investing, it is just something that you will have to get used to. The stock market for dummies can be intimidating esecially when you add in the tax component.
Stock Market Investing - Holding A Stock
Stock Market For Beginners Lesson 5 - Now that you have decided to invest in the stock market and you own a stock, you will want to keep a close eye on it. The stock you own will go up and/or down everyday. That is normal and hopefully for you it will spend more time going up than down.
You can check your account anytime for a stock market quote, and you will need to figure out how long you want to keep your stock. You can get stock market advice like this by finding people who have recommended the stock you own. See what they say about your stock. Do they give you their target price? If so, what is it and do you want to hold on to your stock until it reaches that price? At some point you are going to want to sell stock and figuring out when is the right time may be the most difficult decision of all.
Your stock may also go down. In a down market, the stock market prices of most stocks goes down. If you buy a stock and it starts to go down, how long do you want to continue to hold on to that stock? The stock market for beginners is sometimes very difficult to get used to and to figure out. You will need to get used to your tolerance level as some people do not like to lose money for any reason. For those types of people, stock market investing may not be for them. Perhaps they should invest in a safe bank CD
HOW TO BUY STOCKS FOR DUMMIES
Stock Market For Beginners Lesson 4 - Once you have money in your account, you can now invest in the stock market and buy stock. Since this is 2008 and everything is very simple online, we will assume you are going to want to learn how to buy stocks for beginners online.
When you go into your online account with whatever online stock broker you have chosen, you will get a user account number or name and a password. It will be just the same as any other account you may have on the Internet.
You will want to buy your first stock and you will probably have decided on a stock by reading the newspaper and other stock market news. You can find stock market advice almost everywhere now days. There are many TV shows you can watch where the "experts" make their picks, magazines, radio shows, and many Internet sites all offering free stock market advice and picks.
To buy your stock you need to put in your stocks symbol which will pull up some numerical information about that stock (stock market quote) as well as some news stories. There will be a "buy" and "sell" button and you will click the buy button.
You will then fill in how many shares you want to buy, pick the "market" option, and your stock will be bought for you . You should momentarily see some confirmation that the stock has been purchased and at what price.
Congratulations! The stock market for dummies might have seemed complicated but you have just bought your first stock!
How To Open A Stock Market Account
Investing in the stock market is not very hard but you do have to pick an online broker and open an account. There are many online discount brokers and one of the best for beginner investors is TradeKing. This is because their fees are low and there are no account minimums.
Generally, if you have less than $1,000 to invest in stocks, I would say don't bother but with TradeKing you can open an account for what you have, no matter how little it is. This makes them a great choice for anyone who wants to set up their first stock account online.
You always have to be prepared to lose money in stocks because it can happen with any stocks you pick. No stock goes up all the time and your investment strategy should be to find companies that are solid, have good products that people like, and are well poised to make money in the future. Invest money for the long term if you want to have the best chance of making money and overcoming all the ups and downs the market goes through.
How Stocks Are Valued
Stock Market For Dummies Lesson 2 - The stock market is a strange beast and the longer you are stock market investing the more you realize this. If a company is making a lot of money, logic dictates that the stock price will be high or at least going up. This is not always the case, however, as the one thing you must understand is that supply and demand is the most important determinant of a stock's price.
Even if a company is making lots of money today, they might have told investors that the future does not look so bright. If in the future sales are expected to slow down, many people may not want the stock and may want to sell it. In this case, even though the company is doing well at this moment, it might not do as well in the future. This makes people want to sell and the stock price go down.
Conversly, if a new technology is on the horizon, a brand new company may be making very little money right now today but the future looks very bright. At some future time this company may make a ton of money and so people want to invest in stock today in anticipation of what might happen tomorrow.
This is one of the most important concepts of the stock market for beginners to understand. There is no set price or guideline for a stock's price. Stock market investing and the price of a stock is solely determined by what people perceive the value to be.
What Is Stock Market Investing?
Stock Market For Dummies Lesson 1 - The stock market is a trading exchange where you can buy and sell shares of stock of different companies. The price of every company's stock is driven by supply (the number of shares available) and demand (the number of shares people want to buy).
If you like a company and think they will do well in the future, you will want to buy stock. However, if other people think the same way and also want to buy that company's stock, the stock price will go up because there will be lots of people wanting to buy (demand).
In just the opposite way, if a company is perceived to be doing poorly, there will probably be very few people wanting to buy the stock and more people wanting to sell it. In this case, the price of the stock will go down because there will be more sellers (supply) than buyers (demand).
Stock Market investing takes place mostly at the two biggest exchanges which are the New York Stock Exchange (NYSE) and the Nasdaq. These two exchanges handle the bulk of the
trades. You can invest in stock market by buying stock through a telephone call to your broker or by making the trades yourself on your computer. Being able to make a stock trade yourself online is something that has only been possible in the last 10 years or so.
The best way to learn about the stock market for beginners is to read as much as you can. Understanding the stock market is a big task and there are many free resourses on the Internet including this website.
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