Stock Trading Fundamentals

In stock trading, a company’s stock is listed either publicly (over the counter) or behind a firewall. Behind a firewall, the stock trades are exempt from all local and federal regulations and listing requirements of regular open stock exchanges (OSX). A stock exchange, equity market, or shared market is a group of buyers and sellers of shares of a company, who collectively represent ownership interests in companies; these can include common stock traded on the Over-the-Counter Bulletin Board (OTCBB), penny stock, or specialty stock. The latter two types usually involve high risk of non-recourse, and hence very high brokerage fees, to the buyers.

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The first stock trade in the United States – and an infamous one at that – was made by Benjamin Graham, a successful investor, when he began buying shares of a company and selling them to his friends for a profit. Graham also negotiated a deal with the company to purchase a large amount of shares at discounted rates, thereby creating a panic among the company’s shareholders. This became known as the “Graham effect.” This example, though, illustrates the importance of establishing a first stock trading position in a company before making an investment; a good brokerage firm will help investors set up such a position. This makes investors immune to the “hare trap,” and thus able to focus on the more important things – such as growth prospects, return on investments (ROI) and dividends.

Today, many firms that handle stock trading allow investors to trade their own funds and buy and sell shares of stock through online brokerage accounts. It is important, though, to remember that stock trading involves risks, so you should only take an investment approach if you are prepared to lose some money. It’s also a good idea to learn about the various strategies used to make money off stocks so that you can avoid making the same mistakes. You don’t need to have the most advanced degrees to make money on the stock market – it’s possible to learn some basics, get experience under the guidance of an experienced stock trader and start making money before you know it. If you have the time and the patience, stock trading can be very profitable.