What is Stock Trading?Stock Trading is buying and selling shares of a publicly traded company for profits that entails inherent risk should be taken into consideration by a stock trader. In general behind Stock Trading, a trading strategy lies, which in best case scenario allows the stock trader to buy and sell stocks consistently profitably. Passive investing refers to the form of Stock Trading, when you buy stocks and hold them in your stock portfolio for the long term. Active Stock Trading involves buying and selling stocks on a monthly, weekly, daily, hourly basis or as in Day Trading, often even within seconds. |
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To put in plainly, Stock Trading involves buying and selling of shares in a particular company. If you are in the possession of stocks and shares of a company, it translates to you owning a piece of it.
An individual or professional, who trades on behalf of a financial firm is known as stock trader. Stock traders, be they private- or institutional investors play a major role in the stock market because they trigger the highly demanded liquidity which in turn allows the economy stay actionable, and helps investors of all types earn money on their investments, being not dissimilar to a never-ending cycle where the current balance of supply and demand in the stock market determines the direction of market movements that boils down to the changes of stock prices. |
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A layperson might think Stock Trading is a job only Wall Street professionals do, but with the rise of online stock brokers that facilitate Stock Trading via online trading platforms, today virtually anyone can trade stocks. Studies revealed, a huge number of Americans own stocks, mostly through mutual funds in IRA (retirement) accounts. However unfortunately without the possession of basic knowledge about stock investments, everyday persons can hardly understand accurately how their hard-earned dollars work for them, if they do. Investment firms behind mutual funds and hedge funds invest their clients' money through financial professionals and money managers that all are committed to stock trading but their goals sometimes don't equal to your goals
In addition there is no warranty expressed or implied that your money is safeguarded over long period of time. Although regardless of the time horizon they are engaged with, all investors' primary goal is to buy stock at a low price and later sell it at a higher price, even professionals might be mistaken in the long run, while investing your hard-earned money. |
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Investing as a self-sufficient Stock Trader more often than not is more lucrative, assuming you are experienced, using a solid stock trading strategy, versus investment in funds involves lower rate of risk in par with moderated proceeds. If you want to trade actively, especially if you aspire for a career as an Intraday Trader, you need to understand the risks and be comfortable with them. Unlike in case of active Intraday Trading, if you are an investor with mid- to long-term timeframes, at times, you might decide to hold your stock portfolio partially or in a whole, through a passive trading strategy. Even though active trading is prone to be more profitably than long-term investment, researches proved, a lot of very successful long-term investors do not trade continually.
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After you decided to become a Stock Trader, before you look into buying and selling stocks, you can sign up to expert advice service of a financial advisor or handle your overall trading activity and stock portfolio on your own, on an online broker's stock trading platform, widely available via desktops, smartphones or a trading app. Today, typically Stock Trades on a stock exchange are executed electronically. | |||
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