What are Stocks?

Stocks are a way of investing in a company by buying an ownership stake in it. The more stocks (or shares), the greater your profit when the company appreciates in value.

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Trading incurs a high level of risk and can result in the loss of all your capital.

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What are the Different Types of Stocks?

It isn’t always enough just to wonder “what are stocks?” since the options are as wide and varied as the companies they represent.

You can buy stocks in tech companies like Apple or Amazon, large corporations like Walmart or Procter & Gamble, banks like JPMorgan Chase & Co or even in energy industry companies such as Chevron.

As long as companies adhere to certain financial rules, they can “create” certain kinds of stocks.

Common stocks are, as the name implies, the most common and can be bought by pretty much anyone wanting to do so (assuming they have enough capital to afford it). Common stock usually comes with certain voting rights on company decisions but – more importantly – with a share of the company’s profits (or losses).

You may also be able to purchase “preferred stocks” which typically have a higher income that is usually also fixed & guaranteed. Those shares also tend to suffer less volatility. The reason these are called “preferred” stocks is that, since the stockholder here does not have voting rights, he or she is not held accountable for a company failure. In case of liquidation, preferred stockholders are considered debt holders and are remunerated from a company’s assets before common stockholders.

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How to Trade Stocks

Now that you know what stocks are, you are probably asking the next question, which is – of course – how to trade stocks.

In pure technical terms, it is a rather simple enterprise, at least in our day and age.
With the advancement of technology and the “opening” up of most global exchanges, anyone across the world can buy stocks in any company. All you would need is an internet connection and an account with an online broker and enough money, of course.

But that is not the question at hand, because if it were, you would not need a “how to buy shares for beginners” guide.

The trick to becoming a successful trader in any stock is learning to “read” the market, to be in-tune with all the comings and goings, successes and failures of the company and its market sector.

For example – If a report is about to come out that will show more people buying household items online, that would be great for Amazon’s stock, so owning it would be good for you.

But of course – there is also a downside.

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