Now that you’ve got some investing tips, it is time to learn the nitty-gritty’s of investing in stocks. Chances are, somewhere during your family get-together a drunken uncle told you that investing in stocks is all-cash-and-no-effort. Who can argue with that? Unfortunately, that is not true at all.
Turn Your Investing In Stocks Into A High Performing Machine
Risk vs. Reward – The stock market is based on the premise that investors will voluntarily invest if they are compensated for taking on the risk of investing in stocks by taking a certain amount of risk. This risk can be in the form of, but is not limited to; losing your home or car; getting married; getting a divorce; or obtaining a bad haircut. No matter how much someone may wish for something, chances are they can’t obtain it. Now, if the person decides to take the risk and invest in stocks, he is rewarded in the form of shares of ownership in the company he chose. This is where the risk/reward difference is made, and if one wanted to make a very large investment, or a relatively small one, would be determined by the discount brokers available to the investor.
Discount Brokers – In terms of investing in stocks, the discount brokers are those firms that provide traders with stock picks from a wide array of companies that offer varying prices. As a trader purchases stocks via these brokers, he does not actually purchase 100% shares of the corporation. Instead, he trades a set number of shares at a discount, typically one or two percent, hence the name discount. This is the best method of trading stocks because, while you can make money trading them as you choose, you don’t risk as much as when you trade shares directly through a brokerage firm.