Trading Stocks

Trading Stocks or Trading FOREX?

Trading stocks has been a popular investment pastime for hundreds of years. Companies issue stocks to raise capital for expansion and new projects, and each share of the stock represents a partial ownership in the company.

When the company does well and makes a profit, the value of the stocks rise. Stock owners can sell their shares for a profit or hold on to the stock for even more gain in the future. Sometimes companies will issue dividends – part of the profits that are distributed to share holders.

Trading stocks occurs on stock exchanges. Most trading stocks are bought and sold through brokers who charge a commission or fee for this service. American stock exchanges include the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most trading stocks are only listed on one exchange, although large companies may have listings of trading stocks on several exchanges.

Trading stocks was traditionally seen as a long term investment strategy. So called 'blue chip' trading stocks - those having proven value over many years - may form the backbone of an investment portfolio. Short term trading is a relatively new phenomenon made possible with the advent of Internet stock trading. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in one stock trading period. It is relatively risky and any profits realized are reduced by broker commissions charged on each stock trading transaction.

Stock trading may sometimes occur on margin, meaning that the investor borrows money to buy the stocks. Margin rates are usually around 50% - the investor can borrow as much as half the value of the stock.

For more information on FOREX trading as compared to trading stocks, click here.

Then you'll be in a position to decide whether trading stocks is what interests you, or whether FOREX trading is more your style. Or quite possibly you'll decide on a combination of both trading stocks and trading FOREX. It will help spread your risk!