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Sunday, April 12, 2015

How to make money in stock market ?

Step 1: Create an online account:

Use any of the following online trading company to create your account. The online transaction fees to trade stocks ranges from $6.99 to $9.99 per transaction.Some requires minimum deposit, and others not require any deposit to open an account. All the them provide some sort of access to real-time streaming of stock quotes. So choose the company that you are comfortable, and create an account.



I use TDAmeritrade account for buying/selling stocks.



Step 2:  Start building your wealth

Login to the account, and navigate to the section where you can buy and sell stocks. The below screenshot shows a typical form to buy/sell stocks. First choose the transaction type - buy/sell option. In most cases fields such as Quantity, Symbol and Price are the only required fields to enter in this form.


Things you should know about this transaction.


Quantity: It is the number of stocks you are planning to buy or sell in this transaction.


Symbol: It is the ticker symbol of the company you are going to buy or sell. For example, Lets say you are interested in buying AT&T - You will enter the ticker symbol T as your choice. Do your research before investing in any stock. On top of my head is AT&T stock. I chose AT&T because, it is currently trading at a fair price of $32.77 per share. It gives an healthy return on investment in the form of dividend yield. To be more specific, it gives out $0.47 per share to the investors every quarter, or a healthy 5.74% dividend yield on the money you invested.


Order Type: The details of the various options of order type are as follows.


Limit
For buying, it is the highest price you are willing to pay for a stock.
For selling, it is the lowest price you are willing to sell a stock.

The order will only be executed when the market price (i.e , current price of the stock) reaches your limit price or better.
Market
You use the market order to execute(buy or sell) immediately at the current market price of the stock. In most cases, the order gets executed as soon as you submit the hit button.
Stop Market
Stop market order is typically used to limit the amount of money that a stock could lose by defining a specific price to exit the investment. It can also be used to help define a price to enter into a new position.
Stop Limit
Stop limit orders are made up of an activation price, as well as a separate limit price. As the market price of the stock meets or exceeds the activation price, the limit price will activate.
Trailing Stop %
Trailing stop order help protect gains or limit losses on a stock using a point-based parameter that automatically moves with the direction of the stock price. Trailing stop orders can only be used to close out of a position.
Trailing Stop $
In this case trailing stop parameter is in dollar amount.





Review your order and submit the form to complete the transaction. Once done, You are officially an investor! Congratulations on your first investment.

Step 3:  Grow your investment.


Invest and reinvest more to grow your investment. If you have done your home work, and picked up a good company, the stock price will go up every year pushing your investment much higher, and you will have a positive cash flow every month or quarter in the form of dividends. Try to reinvest the dividend by buying more stocks. In this case, the dividend money is a qualified dividend, so it is subjected to lower taxes when filing for your tax return. Learn about the tax and its consequences when selling stocks for huge profits.


Remember to enjoy what you do, and have fun.



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