Stocks are traded on exchanges, and their prices fluctuate based on supply and demand, market sentiment, and company performance. Investors trade stocks to capitalize on price movements, aiming for both short-term gains and long-term growth. Trading stocks allows you to build a diversified portfolio, with opportunities for profit through price appreciation or dividends, making them a key asset in global financial markets.
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Stock trading involves buying and selling shares of publicly listed companies on exchanges (PFD) to profit from price movements. Here’s a step-by-step breakdown:
1. Choosing a Brokerage Platform
Traders use online brokers (PFD) or traditional brokerages.
Some platforms offer zero-commission trading, while others charge fees per trade.
2. Account Setup & Funding
Open a brokerage account (individual, IRA, or margin account).
Deposit funds via bank transfer, wire, or check.
Margin accounts allow borrowing money to trade (increases risk/reward).
3. Placing Orders
Market Order: Buy/sell immediately at the current market price.
Limit Order: Set a target price (e.g., "Buy Apple at $150").
Stop-Loss Order: Automatically sells if the stock drops to a set price (risk management).
Stop-Limit Order: Combines stop-loss and limit orders for more control.
4. Types of Trading Strategies
Day Trading: Buy and sell within the same day (no overnight positions).
Swing Trading: Hold stocks for days/weeks to capture trends.
Long-Term Investing ("Buy & Hold"): Hold stocks for years (e.g., Warren Buffett’s approach).
Algorithmic Trading: Uses automated bots for high-frequency trades.
