Trading Stocks- money gets equal opportunities at stock exchange.

Everybody with money gets equal opportunities at stock exchange. It is similar to gambling. 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.

In trading stocks, one should buy the stock other would sell and the process continues like that of cycle. 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. No doubt, our financial markets are marvels of technological efficiency.

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: One with Exchange Floor and other, electronically.

Exchange floor

When the market is open, hundreds of people rushing about shouting and gesturing to one another, talking on phones, watching monitors, and entering data into terminals. It could not look any more chaotic. When order is placed in the market, the brokers order department sends the order to their floor clerk on the exchange. The floor clerk alerts one of the firms floor traders, who would find another floor trader willing to sell. This is easier than it sounds because the floor trader knows which floor traders deal with markets in particular stocks. The two agree on a price and complete the deal. The notification process goes back up the line and your broker calls you back with the final price. The process may take a few minutes or longer depending on the stock and the market. A few days later, you will receive the confirmation notice in the mail.

Of course, this example was a simple trade, complex trades and large blocks of stocks involve considerable more detail.

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:

1. Full-service or traditional brokers: They work with commission based or fee based style and some may go for combined both as hybrid arrangement. They will charge high brokerage. One who does not how to trade stocks and have money will go for this option. Here broker gives advice, recommendation and research report regarding the stock to invest. Nowadays, they are decreasing since the flow of money has decreased as they are inefficient who only trades a few times a year. They charge a flat rate to the customers and there is no discount whatever the amount of the customer.

2) Discount brokers: They work with low brokerage, basically, discount brokers process order in a timely manner. Active traders will approach these types of brokers as they wont need or want advice, research, recommendations or any other services.

However, nowadays trading stocks brokerage varies from one financial security to another.

Trading stocks usually bought at low price and sell at high price and it islong, but it can be done in a reverse way first to sell and then buy and it is known asshort. Many big investors do short and gain lot of money so that they can trade stocks lower level again. Some stocks may go down drastically and at that level one can think of buy that stock.

Some stocks make a constant up and down movement and trading in those stocks is slight easy compared to stocks which has sudden rise in their levels to higher price.

Some tips in trading stocks are as:

Dont invest in the stocks if you dont get the correct information.

Dont buy a stock which is going down and down since it gives big loss rather than small loss if you sell immediately

Dont straight away invest in derivatives if you are not aware of the basics and fully understand the risks involved.

Dont invest money for stock which are bought at higher levels and try to make average of it since if goes down and down it will be waste in dumping more and more money and of no returns on it.

Trading stocks are volatile, so keep a stop loss before it goes to lower level for a minimum loss to occur.

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.