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Stock Trading Types – A Comprehensive Overvi...

Do you want to perform stock trading but don’t know where to start? If you find it confusing or somewhat complicated to trade stocks, this article will help all stock market beginners learn a comprehensive overview on the types of stock traders.

Since you want to trade stocks, you’ve probably made plans to invest your money. Not just to house your funds for safety but to obtain return or profits in the future, which is the chief purpose of investing. You should understand that trading integrates investing your capital in pieces, stocks, or shares of a company. Thus, practical and efficient financial plan and trading strategies are essential.

While there are several stock trading systems and programs available online, you have to decide which strategy will best serve your purpose. Familiarizing yourself with the difference between numerous strategies is the most important step to take. Primarily, though all trading methods are formulated to help traders generate money, the main difference is time.

Remember that all trading programs come with their distinct risks and advantages. If you opt to become a day trader, you should recognize that this venture sell and purchase stocks within a particular time frame, which is between business hours. This type of trading eliminates the overnight risks from foreign traders. Since day trading involves small risk, it is great for making small yet quick profit.

Another type of trading is a swing trading. If you consider this, you will have to trade stock once a week or every few days or weeks. While this trading platform comes with few fees, the risks are quite high.

If you look at stock trading as a long term undertaking, since you will trade with lengthened amount of time, the potential for increased profit is high. This will help you become skilled at managing stock market risks. Keep in mind though that huge profit means more risks.

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Learn How to Buy Stock

While buying stock is a fairly simple process after you have done it a couple of times, it can be a little bit intimidating for the first time stock trader.  Learning how to buy stock is the first step to entering the stock market.  For those of you who have never made a single trade I am going to explain the basics of purchasing a small batch of stocks.

The first step is to open a practice stock trading account.  You don’t want to use real money when you are learning how to buy shares.  It is a good idea to get the mechanics down before using your money.  There are many brokers that offer free practice accounts.  Think-or-Swim is one that I can think of off the top of my head.  Once you have opened your paper money account you can make your first practice trade.

Go to the order screen on the Think-or-Swim software.  You will see different fields that require your input.  You will need to pick a stock that you want to trade, and determine how many fake shares you want to purchase.  Let’s start with IBM as an example.  You would put the symbol IBM in the field for the stock you wish to buy.  Then you enter some quantity.  Let’s use 100 shares for now.  Remember that these are just examples and not advice on what stocks to buy.  Now you must choose what type of order you want to place.  You will see options including: Market, Limit, Stop, Stop Limit.  All of these different order types execute in different ways.

For now we are going to use a market order.  This means that the order will execute as soon as you send it.  You will pay the current asking price for the shares of stock you are trying to purchase.  Once you have filled in all of the fields you can hit the send or execute button.  You will most likely have to confirm your order on the next screen.  That’s it!  You have just gone through the steps necessary to buy stocks.  Continue to experiment with the different order types to give yourself a better idea of your options when making a purchase.