The Basics of Buying Stocks

The stock market is a very complex system where the shares of publicly-traded companies get issued, sold, and bought. It represents a system where you are able to invest money by buying fractions of companies known as stocks and earn money by selling them at a higher price. There are two different uses of the stock market known as speculation and investing.

While it’s much smarter to invest your money, there are some people who prefer speculation. The difference between speculation and investing is that speculators buy stocks just because they hope they will be in a position to sell them at a higher price soon (even if they don’t necessarily know why the price may go up), while investors understand the company that they’re investing in and see potential for growth. Investors typically aren’t looking to earn some quick cash, while most speculators look for profit the first chance they get. Although there are a lot of successful speculators, many have lost fortunes on the stock market. If you’re thinking about buying stocks, then you should know that speculation is far riskier than investing.

The stock market is made up of exchanges, with some of the biggest being Nasdaq, the New York Stock Exchange, and the London Stock Exchange. These exchanges basically act as a market for the shares of stocks and bring together sellers and buyers. The exchanges offer you information about the price of a certain stock by tracking supply and demand. However, it’s not just any regular market where you can just come and buy a certain stock.

Traders are usually represented by brokers, which nowadays is an online broker in most cases. Brokers are tasked with dealing with the exchange on your behalf once you place your stock trades. Most exchanges are open only several hours throughout the day. Nevertheless, if you have a good broker, then you may be able to be part of some premarket and after-hours trading sessions. Nowadays, it’s easy to do trading online, since there are even apps that will let you check the information of certain stocks and invest by using your smartphone. For example, if you want to check stock information about Royal Dutch Shell on your mobile device, you can easily do it via apps like Capital.

Before you start thinking about which stocks you should acquire, it’s very important that you understand how to read stock information. The best way to do this is by learning to use stock tables to gather your information. Reading a stock table will provide you with a lot of insight on a certain company. Otherwise known as stock quotes, they can get a little confusing, so make sure that you completely understand how to use them before you start investing.

If you know anything about the stock market, it’s that the stock prices are constantly changing. However, it’s important to know exactly why these prices are going up and down. Some of the most important factors that determine the price of a stock include supply and demand, natural disasters, the opinions of respected investors, the media, risk, as well as social and political unrest. All of these factors combined determine exactly what the price of a certain stock will be. Another extremely important factor is the number of sellers and buyers. Namely, if there are more buyers than sellers, the stock prices will rise. On the other hand, if there are more sellers than buyers, the stock prices will start dropping.

If you’re interested in buying stocks, then you should know that the stock market is extremely difficult to predict. The main reason why it’s difficult to predict is that new information comes to light every day that either worsens or improves the outlook for companies people are investing in. On top of that, you simply can’t predict the future. Just like it’s impossible to predict the future profits of the entire economy, it’s impossible to predict exactly by how much a certain stock price will rise or fall.

Adam Richards

About Adam Richards

Adam Richards is a semi-retired business professional originally from Bangor, Maine. He spent the majority of his career in sales and marketing where he rose to the marketing lead of a Fortune 1000 company. He then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. He has now returned to Bangor for his retirement and spends his free time writing. This blog will be about everything he learned throughout his career. He'll write on career, workplace, education and technology issues as well as on trends, changes, and advice for the Maine job market and its employers.