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Stock Market Investments

Basics of Stock Investment: How Stocks Trade from A1stockpicks.com

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Learning the basics of how stocks trade on the market is an essential foundation for making successful stock market investments. The following information will provide an understanding of the language and vocabulary of trading and how stock investments travel throughout the system. A1stockpicks.com believes that the best investor is an educated one and encourages new investors to arm themselves with solid market knowledge and stock investment advice.

The Stock Market

Company stocks are most commonly traded on exchanges. These can either be physical arenas full of excited brokers, like the trading floor of the New York Stock Exchange (NYSE), or virtual exchanges that consist of a network of computers and databases, such as the NASDAQ, that handle all aspects of stock trading electronically.

The entire reason for a stock market is to make easier and more organized the exchange of stocks between buyers and sellers. Imagine the difficulty a company would have trying to call individuals to find buyers for their stock. Buyers as well have the advantage of a system of stock investing professionals (brokers) and one convenient place to find the information and stock picks they are looking for.

Major Stock Exchanges

The New York Stock Exchange (NYSE)

The biggest and most well-known exchange in the world is the New York Stock Exchange. The NYSE "Big Board" has been around for over 200 years ago and, until recently, was the only place major U.S. corporations were publicly traded. Among the “Fortune 500" companies listed with the NYSE are powerhouses like General Electric, Chase Manhattan, Citigroup, Coca-Cola, Frito Lay, and Wal-Mart and it is the most influential stock exchange on the globe.

Stock market investment happens face-to-face on the NYSE trading floor, although all processes are supported by computer networks. Orders arrive via brokerage firms and are passed to brokers for stock investment on the floor. The brokers then go to the ‘trading post’ for the stock where a specialist matches buyers with sellers. Stock prices are determined by auction and once a bid is accepted and the trade takes place details are then relayed back to the brokerage firm who notifies the investor of the transaction.

The NASDAQ

The other type of stock exchange is virtual, also known as the “over the counter" (OTC) market. The most prominent of virtual exchanges is known as the NASDAQ. Online stock investment is conducted via a network of computers and databases. All dealers on the NASDAQ conduct trading solely via a telecommunications network without any actual physical location.

The NASDAQ functions with the help of “Market Makers", brokerages that accept the risk of holding a set number of shares in a particular equity. This practice facilitates trading for that security. Money makers compete for customer orders by displaying price quotations, within a prescribed range, for a guaranteed number of shares. Money Makers then may match up buyers and sellers, but most frequently sell directly from their inventory. This process occurs via computer network and these online stock investments occur in seconds.

At one time only the NYSE traded in the major blue chip, Fortune 500 stocks, while the NASDAQ and other exchanges handled the stock investing transactions of second tier and small-cap stocks. The tremendous high-tech boom of the 1990’s changed all that. The NASDAQ is now home to such monster corporate entities as Intel, Microsoft, Cisco, and Dell and has become major competition for the New York Stock Exchange.

Other Stock Exchanges

The American Stock Exchange (AMEX) once held NASDAQ’s current position as the NYSE’s biggest rival. It is now the third largest exchange in the United States. The vast majority of trading on the AMEX now consists of small-cap stocks and derivatives (Futures, Options, and Swaps).

Penny stocks typically trade on the OTC Bulletin Board (OTCBB). Penny stocks, valued at $5.00 or less per share, are high risk stock investments with the potential for high returns in a short amount of time. A1stockpicks.com sister company, www.Affordablestock.com offers an exceptional hot penny stock picks plan.

Welcome to the Stock Market Animal Kingdom
  • Bull Markets & Bulls An optimistic market where stock trading flourishes, gains are high and people are making money. Bulls tend to be optimistic in their stock investing and are willing take some risks.
  • Bear market & Bears A market on the down turn. Trading becomes somewhat sluggish and profits decline. Bears tend to be somewhat pessimistic and cautious in their stock investment practices.
  • Chickens Investors who live in fear of taking any loss whatsoever. They stay with very, very conservative investments or get out of the market all together. When a stock takes even a small dip, these investors will normally choose to sell to protect from further loss, rather than wait for recovery of their stock investment.
  • Pigs These are the big gamblers in the stock market investing world. They are always looking for that one big score even when the risk is very high. Pigs are impulsive and trade on tips without doing the research, often resulting in huge losses.

Affordablestock.com is dedicated to the education and financial success of their valued members. Questions and comments are invited at CEO@A1stockpicks.com. Take advantage of our time-tested stock pick service and become a member today.


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