When you make a trade, there are two types. The first type is the market trade; you buy or sell the stocks for the going rate, whatever it is at the moment. The second is a limit trade and one of the most important types in the stock market trading tutorial. Here you set the price to you’ll buy or sell the shares. When you trade penny stock, you ALWAYS use a limit order. If you remember nothing else from this share market education, remember that. If you want to buy shares for .001 per share and have $1000 to do that, plus the cost of the trade, and order 1,000,000 shares but use the market price you find out very quickly that you don’t always get what you think you’ll get. Market makers, the men that control the shares of specific companies, can decide that they really want .01 a share and suddenly you owe $10,000. Even if there is no foul play, the market moves swiftly and a tenth of a penny can make the difference between a profit and a loss. So, lesson one of the stock trading tutorial is use the limit order and decide ahead of time how much you want to pay and what price you want from the stock. Lesson two of the stock market tutorial goes with the limit order. You don’t need to be a slave to the market. Look for stocks with trends. Some prices go up and down in regular intervals. They volley between two prices. If you find one that does, pick a number close to its bottom price and put in a limit order. You can then go about your business and when it hits that price, you automatically bought it. If the price is lower, you got it for the lower price. The share trading education doesn’t end there. As soon as you find you bought the stock, put in a sell limit order for the upper end of the cycle, and go watch television or eat lunch. The transaction takes place when it hits that price. Do you always make as much as you can? Absolutely not, but you didn’t have expend all the effort either. This stock market trading tutorial gives some share trading education that doesn’t require a lot of effort. Lesson three of the stock market trading tutorial involves knowing how much you want to make on the trade. “What a silly lesson for a stock market trading tutorial.” You say. “I want to make as much as possible.” Sorry, wrong answer. You need to find a comfortable profit and not get greedy. Remember, much of the money you make is in just a few days if you’re a short-term investor. If you made $50 the first day and then added it to you investment and made $60 on that the second day and kept adding and increasing your return, the numbers grow geometrically and just like the penny doubled every day for one year, you soon make a huge sum. If you try to guess at exactly when to trade, you often end up losing all profit. Investing shares for beginners quote, “A profit, like cash, makes no enemies.” Keep that in mind from this stock market trading tutorial.

Buying a stock means that you own a part of a company. A stock is the smallest share that is possible. A stock is issued by companies who raise capital to sell a portion of their company. Those who hold stock also hold the right to voice opinions about how a company runs and share the profits (if any). Even though stock owners have some rights, they do not face responsibility if the company faces a lawsuit or defaults. The worst that can happen to an investor is that their stock will have no value and they will lose their investment. When a company sells stock, they want to raise capital. They might need extra cash or need to purchase new property. A stock issue has a limit to the number of shares. When they are issued, the stocks are assigned a par value. However, the market will soon adjust par value due to the success of the company and its projected value to grow.

An investor should have a broker help make transactions for him because stocks must be sold and bought on a stock exchange. A broker’s job is to take orders from a client and buy or sell certain stocks. The investor may give the broker orders to trade when a stock hits a particular price or what the market can take. When a broker gets a specific instruction, they try to fulfill it by finding an appropriate buyer or seller. The broker works with another broker who represents another buyer or seller. Each broker will get a commission for the sale. Stocks can be more beneficial than other savings investments. They represent owning a portion of a company and the right to help make company decisions. A share equals one vote. In most cases, shareholders are asked to voice their opinions on important decisions. A stockholder also will get money from profits that the company acquires. Profits are give as dividends that could be doled out once or twice a year as the company sees fit. Stocks have the potential to gain more money than the average investment, like bank certificates of deposit and bonds. However, they also carry a greater risk. Investors should be educating themselves about the stock market and find the right type of strategy to use to make the greatest profit. Many will find that they will make more profit in stocks than other type of investment.

Investors who wish to save on commission fees can use a ‘discount broker’. These brokers charge much lower commissions but don’t offer advice or analysis. Investors who like to make their own trading decisions and those who make many trades often use discount brokers for their transactions. Some traders may use both types – there is no reason why you can’t have two brokers.

No matter what type of broker you choose, you must first open an account. Each broker sets their own requirements for maintaining an account balance but it is usually between $500 and $1000. When choosing a broker look at the fine print and find out about the fees involved. Some brokers charge an annual maintenance fee while other charge fees whenever your account balance falls below the minimum. There are two basic types of brokerage accounts. A ‘cash account’ offers no credit – when you buy you pay the full amount of the stock price. A ‘margin’ account, on the other hand, allows you to buy stock ‘on margin’ – the brokerage will carry some of the cost of the stock. The amount of margin varies from broker to broker but the margin must be protected by the value of the client’s portfolio. If the portfolio falls below a specified amount the investor will have to add more funds or sell some stock. Margin accounts allow investors to buy more stock with less cash thereby realizing greater gains (and losses). Because they involve more risk than cash accounts, margin accounts are not recommended for inexperienced traders. Before choosing a particular broker the investor should carefully consider his needs. Does he wish to receive advice about which stocks to buy? Is he uncomfortable making trades on the Internet? If so, he should go with a full-service broker. Technology savvy investors who have the knowledge and confidence to make their own trading decisions are better off with a discount broker.