Stock for Dummies

If you look forward to investing in the stock market but you are uncertain where you should begin, what you need is a guide known as stock for dummies. However, due to the traders not first learning the stock market investing basics and the overflowing information about the stock market online, searching for relevant information can get a little frightening and overpowering. Don’t allow this feeling discourage you in pursuing your trading career. Stock trading is a beneficial investment option, and you should learn how you can make the most out of it.

Beginners Guide to Trading Profits

When you look at a listed stock, two prices will be presented. The price that is lower is the bid amount while the higher price is referred to as the ask price. The bid amount is the highest price an investor will most likely purchase the stock while the ask price is the lowest amount the investor will market or sell the stock for. The spread is the difference between the bid amount and the ask price. If the spread is smaller, the more advantageous it is for the investor. You should keep in mind that a high bid-ask spread delineates that the stock has low liquidity, making it more difficult to look for a buyer when you are trying to sell the stock.

Other trading jargons in stock for dummies that you should familiarize yourself with are limit orders and market orders. A market order is about purchasing or selling a stock at the most beneficial price available in the market during the order. When purchasing a stock, a market order will normally be the ask amount quoted except when the stock price is moving abruptly. On the other hand, when you sell a stock, a market order will frequently be the bid amount.

A limit order permits you to discover what price you will have to purchase or sell a stock. For instance, if a stock’s last trading price is $30.25, you may desire to place a limit order to purchase it for $30. If your limit order can be closed at $30 or lower, the order will be filled. If the stock will not be bought on your limit price or better, then it will not be purchased. You can place a limit order as GTC or day order, which is considered good until it becomes a cancelled order. Note that a day order will expire at the trading day’s end while a GTC order will still be open until a cancel order is positioned.

If you want to protect your trading capital, you should also learn about a stop order. It is a strategy utilized to guard your funds against immense losses. For instance, you have purchased a stock at $40 per share but you would like to release the stock it if plummets below $38 per share, you should then place a stop order at $38. Thus, if the stock drops to $38, your shares will be sold automatically. While this technique is a very efficient money saving tool against unwanted losses, you should not position them too near to the existing price.

Stock Trading for Dummies

Stock for dummies guide will help you become comfortable and adept in executing your trades. This will allow you to trade on the right track even if you’re just a novice trader. See some additional stock market investing tips for dummies.

Leave a Reply