How to Trade Stocks - The Secret Techniques of Successful Stock Trading

Learning how to trade stocks can be a very profitable venture and if done the right way, it can put you in the financial freedom you have always dreamed of. When you buy stock, what you're actually doing is buying a part of the company. The good thing is, you don't have to get up everyday and deal with all the stuff that goes along with owning a company. All you get to do is collect on the profits, how cool is that? The stock market actually dates back to the 16th century with the Dutch as a way of financing their businesses by using the money from people who bought pieces or shares, of their company. In return, the company would “pay back” their investors with the wealth that company generated when it started earning profits.

Variety is the spice of life and just like anything else worthwhile, there is a variety in the kinds of stocks that are available. Common stock is the most common stock available today and anyone can own one. There are no restrictions on who can purchase common stock and it represents a person portion of ownership in a company. When you own stock, you are considered shareholder and the more “shareholders” that own a portion of a company, it acquires more assets which generates more money and in turn increases the value of the company. This drives up the value of the stock and makes it worth more than you first paid for it, turning a profit for you.

One of the biggest stock exchanges in the world is the New York Stock Exchange (NYSE), there's also the American Stock Exchange (AMEX) that is composed of the Philadelphia, Chicago, Boston and San Francisco Exchanges and have merged with the NASDAQ stock market. These are all listed exchanges which mean that brokerage firms send out people who are considered specialists in trading stocks. These specialists are responsible for all of the trading of certain stocks. The number of shares that are traded within a day is known as Volume of which is counted by the specialist. The specialist then reports to the exchange along with any other important information about the size and price of each trade.

NYSE is still traded face to face everyday, just like you see on the news when they talk about the stock market. Trading stocks are like auctions so there is no set price in the stock market. The last trade sets the price of that stock however, the actual price of a stock is who ever is willing to pay the highest price for it at any moment. When you own a share of stock, what you hope for is a high demand of that stock, the higher the demand, the higher the price, the better for you. Often though, things work the other way and a company's stock does not do so well in the stock market and demand is low, this makes the stock low, so shareholders have to sell low. If you're a smart trader though, you know that this can happen all in one day and the next day things could change. Some stocks are meant to be more of a long term investment which means the longer you hang on to a stock, the better your chances are of making a good profit.

We hope this article has helped a little with your knowledge of the stock market. Good luck and happy trading.