Finance 101: Stocks Trading
Stock trading does not literally mean trading or exchanging stocks but it involves buying and selling of stocks. There are basically two known ways of stock trading and these are: the exchange floor and electronic or online trading. This article is to provide us with a basic understanding on the difference and the characteristics between the two.
The exchange floor is the usual seen that we see on TV where brokers and floor traders shout at each other in a frenzy. It consists of a huge screen where the status of the market can be seen.
Trading stocks in the exchange floor works like this:
- the client calls up his broker and informs him that he wants to buy a certain number of shares. The broker finds a floor trader who is willing to sell the equal amount of shares. This is how stock trading normally works but there is a new type of trading that is being popular as I write and that is: online trading.
Electronic Trading or online trading is where a client can have direct access to traders via an Electronic Communication Network. Through the use of the internet and an exclusive account, you can directly contact a trader who is likewise online. You may communicate through the use of a specific portal that can serve as the exchange floor. Your broker may also be linked at your account so he can track down the shares for you. It is advisable to research more about the online broker that you plan to employ.
Trading stocks involves risks. If you’re not the type of person who is open to risks then I suggest that trading stocks are not for you. However, try to go over your fear of losing money and start investing stocks with lower capital or with an amount you are most comfortable with. Remember that there are many ways to obtain financial freedom and trading stocks may just be an option that can work for you.
If you are already ready to invest in stocks, you may research more about the two methods to know which will work for you.
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