The Different Types Of Stocks In Stock Trading

Today, you will find that there are different types of stocks in the stock trading market. While, you do not need to be an expert on the different stocks types, it is very essential to understand them basically and to learn to differentiate them for a successful stock trading.

You will find that some stocks are better suited to your needs than others based on your goals and your investment. Various kinds of stocks are discussed below:

Common Stocks

Common stocks offer you a specific amount of ownership of a company. Besides entitling you to some dividends, these stocks also allow you one vote for each share you own in making key business decisions like electing directors. Common stocks are different from debentures or bonds.

Preferred Stocks

Another of the different kinds of stocks is the Preferred stocks, which offer you preferential treatment when it comes to paying out of dividends. Stocks holders having preferred stocks get faster access to any assets not used towards paying debts, if the company goes bankrupt. In simply out words, your position is more if you have a preferred cumulative stock. Holding preferred types of stock usually deprives you of having any voting ability.

Growth Stocks

Companies experiencing a rapid growth and expecting to continue grow in the future offer Growth stocks. Such companies are generally stable and investing money in new products. Investors are attracted to these growth stocks as they allow them to make money fast from a growing and prospering company. However, there is a risk involved as there is no guarantee that the company will continue to grow and prosper as projected. Besides, these stocks are often expensive.

Initial Public Offering (IPO) Stock

The company's IPO, or Initial Public Offering, is the first time a company sells shares to be publicly traded. At this time, the company may offer stock options which may not be available months later.

Penny Stock

Another of different stocks types are Penny stocks. Penny stocks are high risk stocks for businesses struggling to survive and are still in their early stages. Usually selling for less than five dollars on the market, most of these stocks tend not to do so well, although there are occasional surprises for the investors.

You definitely have an influence in a company if you are a stock holder. But the type of influence you have will depend on the different kinds of stocks you have. Having a complete knowledge on different stock types and their benefits will help you make the best investment choice for you.