How To Invest In The Stock Market

I wanted to share some ideas on how to get started in the stock market.

The first thing to understand is how the stock market works...

The stock market works like an auction. There are buyers and sellers and no fixed price for any item.

The main difference is, that between the buyer and the seller there are middle men, (specialists called stock brokers and floor brokers) who do the buying for you or the selling for a company.

If you decide to enter the stock market, what you are essentially doing is buying a stock in a company.

The idea of the stock market originated some 200 hundred years ago in East Manhattan where people traded silver for papers that indicated they had bought shares in the cargo that was arriving on ships to the USA.

This practice grew and during the American Revolution the government sold bonds to fund its war campaign.

After a time, people who had bought these bonds could trade them in for a profit. Banks then began to sell shares in their companies in order to get extra capital. This was the beginning of the stock market.

The biggest stock market is the New York Stock Exchange (NYSE) on Wall Street. Billions of dollars change hands every day in this market. Every day, companies sell part or all of their stock to the public.

These shares in the company are bought and sold through controlled stock markets, such as the NYSE.

Other stock markets you might hear of are the American Stock Exchange (AMEX) and the NASDAQ, which is a completely electronic system.

There are many smaller markets all over America. Internationally there are many others.

You may watch the action of the stock market on TV - it looks like chaos!

But it is organized chaos.

What is happening is frenzied trading as the specialists on the stock exchange floor are trying to match buyers with sellers, getting the best price for everyone concerned.

This type of activity is being bypassed by systems such as the NASDAQ and AMEX as technology excludes the use of the specialists.

Investors (that's you, trying to get into the stock market) can buy and sell stock over the internet.

However if you want get into the stock market and would prefer to do it through a specialist, you will need to get in touch with a stock broker.

If you have some money you want to invest in the market, but you don't know how, the first thing would be to contact a stock broker and tell him how much money you have and the type of company you would like to invest in.

Your broker will then contact one of his employees on the stock exchange floor (a floor broker) and tell him that he has a customer who wants to buy some stock.

The floor broker will then go to the part of the stock exchange that sells the type of stock you, the buyer, wants to purchase and gets it for you.

Your trade is reported electronically, and then the floor broker contacts your broker, who makes a record of the stock you have now bought and informs you of the success of your purchase.

Your broker will be able to sell these shares for you at a later time (it could be that same day or years later) and hopefully you will be selling them at a profit. The broker charges a fee for doing this for you.

There are no guarantees with the stock market. Share prices go up and share prices go down. If you want to get involved in this type of investment you have to be prepared to lose money as well as make it. The best preparation is to be well-informed. Only when you have made a study of how the stock market works should you start investing in it. Don't just rely on your broker. Learn everything you can before you contact one. Do your homework first.

If you would like learn more on how to invest in the stock market, I have an audio here to help you...

http://www.theempoweredsoul.com/stocks.html