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Basics of Brokerages
Today's economy has everyone frazzled. Not knowing what will happen next keeps us all a little bit off balance. Even more the reason to keep a close watch on your resources and on the market trends. To learn as much as you can will always benefit you and your future.
So, let's begin at the beginning with a very rudimentary overview. There are two types of stock. One is preferred and the other is common stock. Most individually held stocks are common stocks, so that's what you would be purchasing as an individual stockholder. You would own a small portion of the company and have a right to vote on the board of directors and other matters concerning that company.
If the company becomes profitable, you will receive your proportionate share of the company's profits, according to the number of shares you own. You have limited liability if the company goes belly-up and your loss would be only the amount of stock you own. A privately owned company could be held accountable for the losses of the company.
Online trading platforms have become very user friendly for the novice trader and it just depends on which platform you find easiest to maneuver and understand. All of the large companies have trading platforms today. Compare the setup minimums to open your account and also be sure to read the fine print. Avoid extra charges for maintenance or inactivity fees. Start by looking at Fidelity, E-trade, Wells Fargo, TD Ameritrade, Scottrade and Charles Schwab. A trial period is offered by many, so you can actually use the software before you decide.
The futures market encompasses metals, food, fiber, currencies, indexes, grains, energy, livestock, dairy, housing and interest rate futures. Most stock trading platforms trade futures. You may want to read and compare the fine print before signing on. If you decide to give trading a try, start small and take time to get a feel for the market pulse. Go to the Motley Fool website and try the My Caps game. Make your stock picks and see how you fare, before using real money. Learn from the top players. Watch the daily financial shows and keep up with what's going on in the financial world, such as CNBC, Jim Cramer's show and Fast Money. They are invaluable.
Pennystocks are stocks that trade smaller, more highly speculative companies at anywhere from one penny to a dollar. These companies are most at risk for scams, so beware. Do your research and learn as much as you can before investing. Always consider how much money you're willing to lose, since investing in stocks holds no guarantees.
The financial picture today is in a very tumultuous state. If you feel you want to open your own account, be sure to use caution and learn as much as you can about that company, before you invest your hard earned money. Keep up with any current news headlines related to that company. It may be wise to put your money into bonds and watch and learn for awhile. When you feel you're ready to invest, be sure to diversify your holdings, that way if one investment doesn't do well, you only lose a small portion of your money.
