What does a beginning investor or trader want to know?
And need to know?


A Note of Introduction to this Website:

The term “stock market basics” encompasses an extremely wide range of subject matter and it will be a challenge to provide the full scope of information that can meet the needs of every visitor to this site who is seeking an explanation for a specific topic – but we will make a serious effort to do so.

The “how and the what” –  to get into action

A visitor may be wishing to become an active participant in the market action and want to know how to trade or invest and what to trade or invest in. Therefore, the information provided here is meant to cater mainly to that group of would-be traders or investors.

To answer frequently asked questions, some articles on the Stock Market Basics website will provide a reasonably full and appropriate explanation and for some others we will provide specific links to other internet websites where more detailed explanations or informative data can be found.


Quick Start! Let’s get into the stock market action right away!

In the next post we can start with a simulated stock purchase, choosing a stock with the characteristics that makes it a promising trading candidate to make a profit. In doing this, we can follow the daily progress of that stock in the marketplace. And meanwhile, reference can be made to other stock market basics topics as we go.

First things

If a newcomer to the field has not established a brokerage account, doing so will be one of the first priorities.  It requires filling out a standard application to the brokerage house of choice. The application requests some basic financial information and the nomination of the type of trading anticipated. Usually it does not need a lot of capital to open an account

Stock Basics

For our discussions here we will assume that trading will be done online with an online discount broker as opposed to a full service broker, meaning that the investors will make their investment and trading decisions without advice from the broker. However, many discount brokers do provide research, training courses and other tools to assist in the decision making process. A description of both full service brokerages and discount brokerages can be found at Stockbrokers for Online Trading.

Problems with brokers can arise

But it is only fair to say that annoying problems do arise in dealing with brokerage houses and you, the customer, must be diligent in checking and following up transactions. You can become aware of what to look for by reading on the internet the complaints of other investors, this will alert you about what to be prepared for. Check out stock market forums, they are where you might find discussions about broker related experiences and opinions, good and bad.

The cost of making a stock transaction differs among brokers, so we suggest checking a few to determine the rates and the services and tools they offer. Some brokers to check out are:
E-Trade, TD Ameritrade, Scottrade, Charles Schwab, OptionsXpres, Zecco, TradeKing, thinkorswim, Options-House, trade MONSTER, MB Trading. And there are many others, this Stock Market Basics website urges all would-be traders to always take the time to check for additions to such lists which are usually compiled from memory and will inevitably overlook other worthy institutions.

For Website links to some online brokerages see the link provided above.

A little background – The Stock Market

The stock market is the umbrella term used to describe all the activities related to the buying and selling of shares of companies and the buying and selling of other financial instruments such as bonds, futures, options, and other derivatives, sometimes also described as securities.

There is no single particular location, but it defines the environment of trading activity between buyers and sellers occurring throughout a network of institutions that facilitate the exchange of money and equity ownership. In most countries, trading activities take place under the jurisdiction of institutions called Stock Exchanges, some of which are fully housed in buildings while others substantially operate by the electronic means using the online capacity of the internet.

The internet plays a significant role in all trading, providing quick access free of charge to trading platforms and a wide range of essential stock data and information sources.

Wall Street

In the United States we commonly refer to the marketplace as “Wall Street”, which is the location of the New York Stock Exchange and is also the historic site of many other financial institutions. But there are also many stock exchanges in other American cities and almost all countries in the world have their own stock exchanges and their own similar regulations. The stock market has a global presence and stock exchanges throughout the world are connected in a way similar to that in which different banks are connected, enabling inter-bank and inter-stock exchange activities possible, essential for international commerce and finance.

What is a Stock Exchange?

A stock exchange is an institution that provides the physical and electronic resources and the manpower to enable stock market transactions to take place between buyers and sellers during specific hours on business days.

The stock exchanges set rules and regulations that must be strictly adhered to by the companies and the brokers that are associated with the exchange.

Not all stock transactions take place on a stock exchange and the securities of companies that are traded on an exchange must be appropriately qualified and meet certain requirements. Companies that are traded on a stock exchange are classified as “listed” and those that are not traded on a regulated stock exchange are categorized as “unlisted”. The unlisted companies are sold “Over-The-Counter” (OTC).

In the United States, the stock exchanges and other trading organizations are governed by the rules of the federal government’s Securities and Exchange Commission (SEC). Among its many oversight activities, the SEC is responsible for the regulation of the securities markets and for the protection of the interests of investors.