The first step when buying stocks is to decide what company to buy stock in.
You can buy stock in any publicly held corporation, which means that
the public can control the corporation. You cannot buy stock in a privately held
or closely held corporation, which are corporations that are controlled
either by a small group of individuals or by close friends and family. Fortunately,
most of the larger companies are publicly held, and you can buy from them. When
selecting a company to invest in, you should make sure they are in a strong
industry, and make sure the company is strong or growing. For example, Coca Cola
Enterprises is a large company that is one of the strongest in the soft drinks
industry. This would make it a good stock to invest in, although finding a
newer company that is growing rapidly might get you more profits quicker. Choosing
the company to invest in is no easy job, and there are many different methods people
have come up with to select one. Fundamental analysis is one method, in which
you study the company's current management and position in the market. Technical analysis
is another method which is totally based on charts, in which you indentify trends the
company has, and invest accordingly. One popular method is just throwing darts at
the stock page, which often beats out all the other methods.
After you decide what company to invest in, you need to find a broker.
A broker is the only person that can make an order to buy or sell stocks. There
are two types of brokers that every brokerage firm has. The first type
of broker is a stockbroker, who researches investments, helps make goals,
and give advice on investing. Discount brokers on the other hand, do not offer advice, and
they do no research. They just are middle men in the transactions. When you
give a stockbroker your order, they relay the order to the floorbrokers. The
floorbrokers do all the actual buying and selling, and they hold a seat on the
After you find a broker and buy the stocks, the broker does the rest of the work.
You just have to call him up and place an order with him. The most basic order
is the market order, where you just ask the broker to buy or sell your
stocks at the best price he can get his hands on. Another type of order which takes
more research and predicting on your part is a limit order. In a limit order,
you tell the broker to trade only when the stock is at a certain price or better.
A stop order is an order which can save you from extreme loss. In a stop
order, you tell the broker to sell your shares if the stock drops too low, and you
tell him the price not to let it drop below.