Trade Stocks - Types of stock trading. 3. Types of orders. The

The process of buying or selling is known as trading. When stocks are bought and sold that process is known as trading stocks. The place where this stock trading takes place is known as Stock market or stock exchange. The popularity of the stock market makes one wonder the reason for it. The first and foremost reason is that anyone with some amount of money can trade in the stock market. The next reason is that it does not require lot of education; however, it is important to understand the basics of the stock trading, and some mathematical calculations. At the stock market there is no racial discrimination. Everybody with money gets equal opportunities. Moreover, there are no complexities of higher officials, peer pressure, and office tension in this trading, except that one has to be careful about the stock one chooses. Before plunging into the trading, one should understand what it means and how it works.

People get into trading stocks for big and easy money, to get returns on investments sooner, or as full or part time job, or for immediate money. One should start the trading stocks with planning. Moreover, discipline, time and stress management are necessary while one trades in the exchange. They can take guidance from people already involved in the stock trading, because starting alone might cost them too much of money, and learning by trial and error is not recommended unless one does not mind losing money.

While trading stocks, one should buy the stock other would sell and the process continues like that of cycle. Most of the people dont possess the stock forever. At one or other point of time, they sell it off to get their investment back along with some profit, as they would be able to invest their money in other stocks. This keeps continuing until the person would like to take back his investment from the stock market. The system accommodates one billion shares in a single day with huge revenue turnover. During this trading, one may gain or loss depending upon the various parameters and requires high level of knowledge pertaining to it. With the marvels of technological efficiency, the financial markets still maintain each and every transaction, and even the trial to transaction would be recorded in their system.

Before going to trade stocks, one should be able to know the basics of buying and selling stock in the market and how it will work. It involves risk play in investing in stock and should be able to know price how they are fixed. As we want to go deep they are so many things relating to technical side of the markets which makes professionally strong in trading stocks. Trading involves broker whom we can place order to execute a trade. There are two basic ways exchanges execute a trade. 1. Electronically 2. Exchange floor.

Exchange floor

This floor trading is more of excitement, chaos and confusions with people that trade being manually available at the stock exchange. The traders would try talking with other traders, floor clerk, and over their phones also. Traders cannot place an order to buy or sell any stock by themselves. They have to take the help of people at exchange.

Electronically

The electronic markets use vast computer networks to match buyers and sellers, rather than human brokers. It is efficient and fast. Many large institutional traders, such as pension funds, mutual funds, and so forth, prefer this method of trading. For the individual investor, you frequently can get almost instant confirmations on your trades, if that is important to you. It also facilitates further control of online investing by putting you one step closer to the market. A broker is needed to handle your trades as the individuals would not have the access to the electronic markets. The exchange network is accessed by the broker and the system finds a buyer or seller depending on your order. Brokers involved in trading stocks are of two main categories. One is Full service or traditional brokers, and the other is Discount brokers.

There are different types of orders that can be placed in the stock exchange. They are Market orders, Limit orders, Stop orders, and Day orders.

Market Orders: In this type, broker has to buy or sell a specified quantity of stock at the prevailing market price and involves low brokerage rates of very little work on the broker's part.

Limit Order: In this type, broker has to buy stock below a specified price, and sell a security at above specified price and done in vice versa.

Stop Order: In this type, broker has to buy a security at the market price once it reaches a level higher than the current market price. The opposite would be true if you were selling you would tell your broker to sell your security once it reaches a level below the current market price.

Day Order: In this type, broker has to execute the trade by the end of the day; otherwise, he or she does not fill the order.

Thus trading stocks make more money by placing a order through a broker and should be careful in following the above rules because it is a fraction of second it varies from higher level to lower level. So, one need to analyze the stocks that one would like to trade on, before investing a huge amount on them.