Do You Need Stock Trading For Dummies?
When I wrote "stock trading for dummies" I was not referring to stupid people; rather to people who are rookies and have virtually no knowledge of the stock market. If you are a dummy looking for stock trading tips that will jumpstart your knowledge quickly, then read on.
Risk
Stock trading of any kind involves risk. Repeat that to yourself over and over, every day! The first lesson in stock trading for dummies is if it appears too good to be true, then it probably is.
Just like in sports betting, there is no sure thing, unless you have inside information or you have bribed an official -- either way, both are illegal You should have a measured, level-headed approach to stock trading and do not trade with money that you cannot afford to lose. Do not get sucked in by the scam artists who want to sell you a system that is guaranteed to make money!
Portfolio
Your goal should be to build a strong, balanced, and profitable portfolio. By definition, a portfolio is any combination of one or more securities or investments. A common way to balance a stock portfolio is to diversify your risk. Spread your money around in different industries like information technology, aerospace, manufacturing, and service sectors. Do not put all your eggs in one basket. Discipline and money management are the two most important factors for the dummy to learn in successful stock trading.
Trading or Investing
A trader holds securities for a short period of time; an investor holds securities for along time. A short holding period is usually defined from one minute to one year; a long holding period is considered six months to forever.
Stock trading for dummies is actually a misnomer; you do not trade stocks. To "trade" means to buy and sell in the jargon of the financial markets. There are two different ways the dummy can execute his stock trades; buy using a broker or by using his computer. That's because the two ways exchanges execute a trade are on the exchange floor and electronically.
Exchange Floor
Here is how a trade works on the New York Stock Exchange for the dummy trading stocks through a broker. Dummy tells broker to buy 100 shares and then broker sends order to his floor clerk. The floor clerk then alerts on of his firm's floor traders who finds another floor trader willing to sell 100 shares. Then dummy's broker calls him back with the final price.
Electronically
The New York Stock Exchange handles a small percent of trades electronically while the NASDQ is completely electronic. The electronic markets use large computer networks to match buyers and sellers, rather than human brokers.
