Stock Basics

BetterTrades Stock and Options Basics

Buying and selling stock is the way the average investor views the stock market. Inexperienced BetterTrades students often think when beginning their education is the only way to play the market is by buying and selling stocks. It's certainly the most common approach, although it can be quite expensive. After all, when one share of Apple Computers is selling for $110, the purchase of 100 shares presents an astronomical obstacle to the average trader.

Stocks are sold by individual shares. These can be bought on the New York Stock Exchange, the American Stock Exchange or the NASDAQ. There is no minimum number of shares that can be purchased.

The party that purchases the stock owns those shares as long as they like. They can sell them at any time, if someone else is willing to meet their price. The stock can also be passed along to family members or friends, who are transferred the same rights and responsibilities.

The price of the stock, learned by students seeking to make better trades, will change every day. Depending on the perception of the stock's value, the price will change many times during the day, and can fluctuate wildly within minutes.

People who own stock may also receive a dividend from the company. A board of directors may reward stockholders with a dividend or bonus, depending on how the stock fared over a specific period of time.

The traditional method of stock investment is the buy-and-hold. A person will buy the stock and hold it, hoping the price will rise and there will be a profit to be gained.