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how exactly do stocks work?

ok i am very interested in investing money in the stock market but i have nooo idea where to start? Theres selling stock, buying stock, trading stock, bonds, ECT... how do stocks work though? i have gone to etrade but wasn't sure what to do... i just need a general explanation on stocks/stock market/

Public Comments

1. simple: 90% of investors loose money and are called as 'weak holders'... it's a market what needs losers in order to exist. http://www.freetomanifest.com/become_millionaire.html
2. This is a very complex question, but here is a VERY simplified answer: Companies raise money by selling shares of the company. Each share of stock gives some voting rights in the decisions of the company (although don't think you have any real power by owning it unless you own a significant share). Once the money is raised, the future profits the company makes are either paid to the shareholders in a determined amount (generally from .5 to 4 percent of the share value) in the form of a dividend, or dumped into a "Retained Earnings" pool that increases the share value divided among the pool of stock holders. Stocks generally trade about 10 to 20 times what they are worth. You can determine this by the P/E ratio, is the price of the stock divided by the amount of company earnings in the last year. All the money you make from a stock is from the dividends you receive (many companies don't pay dividends) and the rise in value of the stock. If you make money, you are taxed using capital gains taxes, which is taxed at a 20 percent maximum rate, or dividends, taxed at 10 or 15 percent. If you lose money, you can deduct the loss. You could lose all your money if a company files bankruptcy, but generally, you will average 8 percent gains per year if you invest for the long run. Choose companies based on solid financial strength and how you feel they will do in tomorrow's economy. There are hundreds of factors affecting stock value, but the primary source of rises are beating financial estmates. Good luck!
3. Read this book. The Neatest Little Guide to Stock Market Investing by Jason Kelly
4. Go to Investopedia.com They have a beginners section that explains everything to you from A to Z.
5. Each company on the stock market has a unique 3 or 4 letter symbol that you have to enter at E*Trade or some other brokerage in order to buy or sell shares for that company. You need to know the symbol for the company and the number of its shares you want to buy or sell. And that's all you need to know in order to buy or sell. You can find the symbol for any company at http://finance.google.com/finance at http://moneycentral.msn.com/home.asp and at http://finance.yahoo.com/ Of course the number of shares you can buy for any given company depends on how much money you have in your account and the current price of the shares. When you have a brokerage account, then with that account you usually get information about the current prices of shares. All you have to do is type in the symbol for the company. and you will know its current price. Buying and selling stocks is easy. Even a 10-year-old kid can be taught how to do it. But making money and avoiding loosing money in stock trading is the difficult part that even the best professionals sometimes struggle with. Basically, any stock price can go up, down, or stay roughly the same. And you need to have a plan for each and every one of these possiblities. The goal of your plan must be to minimize your losses and maximize your profits. Inexperienced stock traders usually buy when everyone else is buying and sell when everyone else is selling. Which means that they buy when the price is high, and they sell when the price is low. And they loose a lot of money that way. In order to be good in stock trading, you must learn to think for yourself and ignore the pull of the stock-trading crowd. The most important thing you need to know is what price is a good price for the stock you want to buy? If you can't judge well whether the current price is a reasonable price or an excessively high price. Then you shouldn't be buying that stock. Because stock-trading without this kind of understanding is no better than gambling which relies on luck. You can open a free stock-trading account at http://simulator.investopedia.com/home.aspx and practice buying and selling stocks with virtual money. You won't make or loose any real money. It's just a game with numbers. But it's a good way to learn stock-trading before you start risking your hard-earned money at E*Trade or some other brokerage.
6. Open a brokerage account at Zecco, E*Trade, TD Ameritrade, Charles Schwab... and I will help you for FREE. (I am a Portfolio Manager)
7. If you want a quick return on your money then trading in cfd,s is the way to go. You dont actually buy shares as such but buy a contract on the assets. You then earn or lose money on the opening and closing price of the asset. Many people have got rich very quick from cfd's but there is also the risk of losing money quickly. Finding a broker will help as they can advice you on stops that sell when the asset falls below a certain amount you can afford to lose. you can find more information at http://www.cfd-to-cfd-trading.co.uk