Basic functions

The old standard is to pay the broker to do the transaction and to do the transaction. But with the emergence of the Internet, people can do electronic transactions, only 6.95 US dollars in transactions. People think this is a big one, so they eagerly jump into the stock market without any prior knowledge of what they are doing. Because of excessive trading and low maintenance, once the deal seems to have a great deal to the trading company has brought huge profits.

Its working principle is very simple. You can sign brokerage accounts in various places; the most popular are Scottrade, Ameritrade and ETrade, but many offer better savings. Once registered, you can start buying and selling stocks right away. [1945900002] Stock Code

Before the listing on the New York Stock Exchange or other exchanges, each company has a special symbol (usually up to 4 on the New York Stock Exchange) Characters). For example, Wal-Mart is called WMT, the target is called TGT, and Ford is called just F. You can find symbols via Google or Yahoo, or even use your online brokerage account, but you need the symbols, and then you can make a purchase . Be careful that you do not swap or erroneous characters because you may accidentally end up with the wrong stock.

Buy and Sell – Limit, Stop Loss, and Stop Orders

When You Go Buying or Selling Shares There are several options to protect yourself from immediate loss and may reduce your capital gains if used improperly.

Market Price

Generally speaking, if you do not use any option, you will buy or sell the market price of the stock. This means that you will receive whatever the maturity rate or quotation of the stock at the time of the transaction. Stop Loss Order (Stop Loss)

Stop Loss Order is where you set a certain amount. Take the purchase as an example, suppose you want to pay $ 30 for Wal-Mart (WMT) stock, but no more. Let's also say that Wal-Mart's current trading price is $ 28 because of good revenue reporting but the value is up, but you do not want to buy the stock until it reaches $ 30 to make sure it's really going to rise. By setting a $ 30 buy stop order, your online brokerage account will wait for the stock price to reach $ 30 and then become a market order, where it will try to buy the stock at market value. Now let's say you own Wal-Mart, you pay $ 30, but you do not want to lose a lot of money, so you place a $ 29 stop-loss order. Your deal will not be activated until Wal-Mart reaches $ 29 at a point in the day. Once it reaches $ 29 for your order to become a regular market order, it will make it the best attempt to fill your order at market prices.

Limit Order

Buy and Sell. When you place a limit order at the company, what you are saying is that I want to buy the stock as long as it is less than that amount. For example, if I put a buy limit order of $ 10 on Vonage (VG) and the stock is currently trading at $ 7, it will continue to try to buy Vonage stock until it exceeds $ 10. When selling a limit order, you say I want to sell my stock, but I do not want to sell any price under my limitations. For example, if you currently have Vonage and it is trading at $ 7, and you decide to sell it, but not less than $ 6, you will set a limit order price of $ 6. Brokerage services will keep trying to fill your order until Vonage drops $ 6. Stop Loss Order

This is a combination of Stop Loss Order and Limit Order. When you buy you will be able to set two prices, which must be set above the current trading price. For example, let's say Advanced Micro Devices (AMD) currently sells for $ 20 per share. You want to buy them, but until they reach the price of $ 20.50, you do not want to pay more than $ 21.00. You then set the stop price to $ 20.50 and the limit to $ 21.00. Once it reaches $ 20.50, Brokerage will try to fill in your order until it reaches $ 21.00. If the price exceeds $ 21.00, your order will not be filled below $ 21.00 any time you specify an order expiration date (typically 1-30 days). Remember, the Stop Limit order is just a combination of the two. When the stop price is reached, it is converted to a limit order. So if AMD were to hit a $ 20.50 stop price, it would still meet the order, even if it fell below $ 20.50 before filling. In fact, your order will be converted to a limit order, so it will try to buy AMD continuously until it exceeds $ 21.00, no matter how low the stock price falls. The sell stop limit works in the opposite way. If you own AMD, it's currently trading at $ 20 and you want to sell it if it's $ 19 but you do not want to sell it if it's under $ 18 before it's filled and then you'll set your stop [1945900002]

There is a way to participate in the stock market without the actual purchase of shares in the company.

put options. It is very similar to predicting the way in which you think the company's stock price will go and then bet on the funds. These are called options, which are the techniques used by major professional investors to make money in the stock market, whether it is rising or falling. For each bet, there is a bet that the two opposing bets are used to form a contract between the buyer and the seller. Contracts are generally considered to be 100 shares.

Put Options

A put option allows the buyer of this contract to sell the goods at the contracted default price. Contracts usually expire within 30 days and are not required to be exercised. For example, if Bob thinks Google (GOOG) will fall after his next earnings report from $ 400 to $ 300, Bob may want to use a put and find a contract that allows him to sell Google for $ 400 any time in the future 30 days or at any time frame is necessary for this prediction. Bob purchased five contracts (500 shares), a premium of $ 20 per contract (totaling $ 10,000), and Google did drop to $ 350. Bob can now exercise his option and sell his five contracts, giving him 500 shares * $ 400 minus ($ 500 * $ 350) minus his $ 10,000 in contract costs. This will give him a capital gain of $ 15,000 from this transaction ($ 200,000 – $ 175,000 – $ 10,000). Let's say Google (GOOG) climbed to $ 450. Bob does not need to execute the transaction because it would result in a loss of $ 10,000 that he spent on the contract was non-refundable. Call Options

Calling Options

Call options are the opposite of put options. Above, the same situation allows us to say, Bob that Google will be released in the income report rose from $ 400 to $ 500. Bob used the call option and bought five contracts (500 shares) for Google to pay a premium of $ 20 per share ($ 10,000). Earnings reports were released, with Google increasing to $ 550. Bob had the right to buy 500 Google shares from the contract author for $ 400, and now he can resell it for $ 550 if he exercised his option. As a result, Bob received $ 65,000 from exercising the option ($ 550 * 500) – ($ 400 * 500) – ($ 10,000 premium). If Google wants to reduce rather than increase, then Bob has the right not to exercise his choice, and then he will lose $ 10,000 on the contract expiration date. Margin Trading

When you make the right choice, margin trading is a good way to magnify your earnings, but it is also A good way to magnify the loss is good. Most brokers allow you to buy up to 50% of the margin. This means that you can only use $ 10,000 of their own money to buy 20,000 US dollars of stock, borrow the other $ 10,000. It's a good way to take advantage of short-term investments, but it has never been recommended for long-term holdings because the $ 10,000 you borrow usually comes from your account paying 10% per annum per annum. In addition, most brokerage services require you to maintain at least 30%, and sometimes even 50% of the current market value in your account due to a sudden market crash.

Therefore, if you buy $ 20,000 in stock for $ 10,000 and $ 10,000, you must keep 30% of all time at $ 20,000, which is $ 6,000 in your account. Keep in mind that the money you borrow will never change, so if $ 20,000 shares lose 20% of the value, then you will have ($ 20,000 * .8) $ 16,000 remaining stock; $ 6,000 This is your own Of the money and $ 10,000, which is still the lender's money. If the stock falls, they are allowed to sell your stock unless you add more cash to the account.