Stock Market Basics - How to Get Started Making Money in the Stock Market

In this article you will learn a number of tricks that can get you up and running within a few days starting today. Therefore, follow the steps below to begin your way to a successful stock trading career.

1. Create a portfolio with Finance.Google.com or Finance.Yahoo.com - This will allow you to trade stock without using real money; which means you get to practice as much as you want and see how you do without using real money before jumping into the real deal. You can start by giving yourself as much money as you $200, sometimes more, to try out the market.

2. Start Testing and the Stock Market - Now that you’ve created your account with no real money, you may commence buying ‘dummy stocks’ straightaway. Since this is ‘Stock Market Basics’, the stocks you want to focus your buying power on are consumer staples, consumer discretionary, and healthcare; things people use on daily basis. These are known as “DEFENSIVE” stocks that will survive through good and bad times in the economy. Examples of such stocks are: 3M, Procter & Gamble, Kimberly Clark, Exxon Mobil, Walmart, Costco and more.

The underlining principle here is that everybody’s got to eat and clean up regardless of the state of economy, right? You bet! Anyway, many of these companies survived through the Great Depression and will survive the current economic downturn no matter what; meaning they’ll be around for a long time to come.

The main advantage of buying these DEFENSIVE stocks is that you can sleep at night knowing your money is doing well. However, there are NO guarantees that you won’t lose money; it’s just that these stocks are the best and safest for people like you who are looking for tips on stock market basics. In addition, they pay good dividends too which is the main thing.

3. Step 3: It’s Time to Start Buying Stocks - Once you’ve tested the stock trading waters and are comfortable, you can finally put in some real money to buy real stocks. A good place to start is at ScotTrade.com (or similar) because they’re excellent stock trading platforms for beginners.

In conclusion, here is some for you:  Since you’re reading “stock trading basics”, chances are you’re new; so DON’T DAY TRADE.  If you do, you’ll end up being a rookie in a world of professionals. Also, day trading involves a lot of commissions to the broker. With all the commissions deducted from each trade, you’ll be lucky if you only lose half your money.

Get your Trading System and sign up for my free weekly online trading system newsletter here at: http://www.stressfreetrading.com.

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Why Does a Company Sell Stock?

As you know, a share of a stock represents the ownership of that company. But why would the founders of a company want to share the profits when they could potentially keep it all for themselves? The answer to this question is that every company needs money. It is very costly to start up a major business and there are limited ways in which a company can raise money. They can either borrow money from someone else (usually the bank) or they can sell part of the company to individuals which is known as issuing stock. This is highly beneficial to the company because they don’t have to pay back anyone or make interest payments along the way.

The only downside to the company is that in order to raise this money they are selling ownership of the company and its profits. The hope that the stock holders have is that someday their shares will be worth more than what they bought them for. There is a risk when buying stock because there is no guarantee that you will make money off of your investment. When a private company issues stock for the first time it is known as an Initial Public Offering (IPO). Any company that sells stock is then known as a corporation.

Not all companies sell stock. You won’t be able to find the local restaurant in your small town trading on the NASQAD anytime soon. Companies do this for a number of reasons. An example is that the company just doesn’t need any extra money to start-up. The owner of the local restaurant is able to finance all the start-up costs - staff, building rent, utilities, bills, etc. - all by himself. However, if he wanted to expand his restaurant into a major franchise - i.e. McDonald’s - then the owner would need a lot of money and would have to convince people to buy the stock by proving to the public that his business will be successful. This is very important because no one will invest in a company deemed to fail.

We implement the complexities of the stock market and put them into terms that the average individual can connect with and understand. If you enjoyed this article and would like to learn more about stock related topics then please visit: http://www.erikandjeff.com

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