Stock Trading -Basics

The key to make the right start in stock market is to master the basics of stock trading. Getting great returns or profits might seem complicated at first. But you can make online stock trading easier for you if you learn the stock trading basics the right way. Knowledge is the most important tool here.

Let’s start with the meaning of a stock. In simple words, stock is a share in the ownership of a company. Shares, equity, or stock, they all mean the same thing. Stocks, representing a claim on the company’s assets and earnings, your ownership in the company grow bigger as you acquire more.

You are one of the many owners or shareholders of a company if you hold the company's stock. This means that you have a claim although usually very small, to everything the company owns. As an owner, you are eligible for your share of the company's earnings as well as any voting rights attached to the stock.

Well, you have just gone through the first step in basics of stock trading. A stock is represented by a stock certificate which is a proof of your ownership. In today's computer age, as all the records are kept electronically, you won't actually get to see this fancy piece of document. Electronic records make the trading easier and faster with a click of the mouse.

Being a stockholder in a company does not give you the freedom to have a say in the day-to-day running of the business. The extent to which you have a say in the company is only extended to the one vote per share to elect the board of directors at annual meetings.

Another very important feature of stock trading is its limited liability. This means that you are not personally liable if the company is not able to pay its debts. In stock trading, no matter what, the maximum value you can lose is the value of your investment.

In the stock trading market it's not impossible to watch a stock move up dramatically in a matter of hours or days. Investors and traders can make great money and fatten their wallets every time this happens.

The basics of online stock trading explained here will help you take the right first step in the world of stocks.