Stock Market Tips For Beginners

If you’re reading “Stock Market for Beginners” you probably have never traded a stock. The stock market is a real place if you’re talking about The New York Stock Exchange, often abbreviated NYSE. This exchange has floor traders that take the orders submitted by customers either online through a company or through their broker. Bidding on the stock occurs, like a crazy auction and the trade then moves to a specialist that facilitates the trade by matching the highest bidder to the lowest seller.

There are other markets besides NYSE. These are primarily electronic markets that are not a specific location. Market makers specialize in a specific stock, like the specialist at the NYSE, but instead of facilitating bid orders, he buys and sells. This is a dealers market where the dealer sells for the ask price, the higher price, and buys for the bid price, the lower price. The difference between the two prices is the spread, or how the dealer makes his money. He may buy a stock from you , put it his inventory and seconds later he sells the stock to someone else. The NASDAQ is the most famous but there are other exchanges. NASDAQ stands for National Association of Security Dealers Automated Quotation. There is no place the market makers all meet but they link electronically.

No stock market for beginners article would be worth anything if it didn’t explain the language of the trade. If you place an order with a broker, most of the time they ask questions in terms that you understand, or make the order decisions themselves. If you go online to place an order then you suddenly have a completely new language in front of you.

First you enter the type of order, a buy or a sell. The order uses the symbol of the stock. Those are the short letters used to identify it. Microsoft symbol is MSFT. The next step is the number of shares that you want to buy. The type of order section is very important if you are a stock market beginner. You have two possibilities, market order or limit order. The market order buys the stock at what ever the price is that minute. In a fast moving market this is very dangerous. If you buy penny stocks, never buy them with a market order. Always use a limit. The limit order sets the highest price you want to pay for the stock. If the price is lower, you get the lower price. The timing section indicates how long you want the trade viable. You have GTC (good until cancelled) and Day. The day order lasts until the close of the market or if you cancel it during the day. The last part of the order, before you hit the trade button is the conditions section. Most traders use ” none” in that section.