Trading stocks involves one needing a stock broker as a stock broker buys and sell the stocks. You could do this yourself; except you need to be a member and for individual traders – it’s very costly to become a member. A traditional stock broker can be sought or you can go through an online brokerage firm. However, a broker can be by-passed should one be trading via a dividend reinvestment plan (DRIP). This type of stock trading is when one where a company offers individuals to buy shares in their company directly.
Stock trading can occur on the floor via a floor broker, also known as a pit broker. You more than likely have seen a picture of one on TV where there is lots of yelling, waving and signaling amongst individuals. The other option is through an online website.
Electronically trading stocks is becoming more popular. Electronic trading allows anyone to buy and sell online. One doesn’t talk to a human broker but rather, you decide which stocks to buy and sell. Some online brokerages offer advice, others do not. Should you decide to do electronic trading, it is advised that you take the time to read what you should do to safeguard your money and personal information. Maybe you would also find it helpful to read a tutorial, as there are pros and cons of trading online. It never hurts to be informed.
So how are stocks traded? They are traded over a stock exchange. The stock exchange is a huge industry where stocks are listed and can be readily bought and sold. There are two major stock exchanges, NASDAQ (originally standing for National Association of Securities Dealers Automated Quotations) and the NYSE (New York Stock Exchange). Since the stock exchanges complete huge numbers of trades each day, the stock you may want to purchase just may be available. This is where the exchange does their job of linking buyers and sellers together.
Should you be nervous about how stock trading all works, there are websites where one can ‘practice.’ This may be a helpful tool for you before you do it live.