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Online Trading And The Basics Of Stocks And Shares

Aug 18, 2007
Many today prefer to buy stocks online because they don't have the time to get involved in trading decisions during the day and want to take decisions only when they are free, that might even be at midnight. Also online trading service providers offer the individual a whole wealth of information to analyze and internalize before making the investment. Further the commission that these service providers charge on each transaction is much less than what on-floor brokers do. So the investor earns a lot more on every transaction.

But to be successful in the field of stocks one is required to have some primary knowledge as to what is what and investing on something will yield how much result. In this article we will briefly try to explain a few fundamental things that any investor on the stock markets should know. And since you will be investing online and there will be no guide for you, knowing these basics will definitely stand you in good stead.

Growth Buying Stocks

These are shares or stocks of companies which are making healthy profits over the recent few years. Since the companies are generating more revenue and are growing at a rapid rate, there stocks are on high demand. This pushes up the price because investors think even a high price is okay cause the stocks will keep on rising. Though that might be true for the recent future, there is a time when the prices will stop to rise or may even start to decline. To predict that time is what separates a good investor from an ordinary one.

Unloved Stocks

These are shares of companies that have not been doing well in the recent past, and hence investors are not to keen. When there is a lack of interest, the price per share drops and many investors believe that this is the right time to invest on them when you buy the shares for less, wait for the company to recover and regain its feet and then sell them at a high profit when the price begins to climb as the company generates higher revenue.

Small-cap

These are shares of companies that have recently come up. They are small in size and are still finding their way. You get their shares for less, but you are taking a higher risk too.

Mid-cap

Comparatively larger companies, which have been now around for a few years and have largely stabilized themselves. Stocks are prices higher than small-caps but involves less risk.

Large-cap

Shares of huge companies that have been around for ages and will be there for a long time. Premium-priced stocks with a lot of security.
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