how to trade stocks online

Guideline for trading Stock online

A guide to the terminology as well as the processes that are supposed to be involved in trading the stock online.

how to trade stocks online

The capability for trading stocks as well as the options that are found on inter-net has opened a world which is quite new for the retailer or the person who invests money in this. With the continued proliferation of the stock on the inter-net and the brokers of options, the regime of increased commissions as well as the restricted information for the on-line retailing traders is supposed to reach a way of the horse-whip of buggy.

At the time before the online trading came into existence, the basic way for researching a stock was trying for the information to be squeezed out of the broker by calling him on phone. Presently, the capability for searching for the basics that you desire to be in the softwares is supposed to available full time and readily with just a simple and single click of mouse.

After getting done with the job of finding a particular stock having all the required characteristics of a particular company, you would possibly liking to start trading, then you require the trade to be placed. With the trading on the internet, it is not only like you are supposed to pay a commission which is lower in most of the cases but also you get a number of options for choosing from to enter the trade.

Guideline for placing a stock trade on the internet:

If you want to learn the way to trade the stocks on the internet through the platforms of stock trading for example, you will be required for knowing the vernacular that is supposed to be involved with the screens of trading.

Firstly, let’s consider the three terms that are considered to be the simplest, but at the same time the most important for understanding before you place a trade on the internet. There are chances for you to see these types of words almost every time when you find a stock quote or may be an option related to that particular matter. The last thing is bidding and asking. Last is actually the price of the trade that is the last and occurred on stock. While, ask is the lowest price of the market currently by the potential sellers. Bid is actually the market price that is currently considered to be the highest that is offered by a buyer potentially. Generally, on natural basis Ask is mostly the price that is higher while bid is the one which is lower.

Stock order on the internet:

A stock order on the internet is basically a set of some particular instructions for buying or selling a particular security. The orders are supposed to be entered on the ticket of the stock order. While this specific order is supposed to include the action, share the amount, time duration, symbol as well as the price. This gives a look of the entry of the order scree of Trade King.

The first thing to be discussed is the action, i.e. to buy or to sell.

Buy: Taking the cash amount from one’s account, purchasing the stock in the market openly and placing the stock in one’s account.

Sell: Selling the stock that is held in one’s account in the market openly and placing the cash in one’s account.

Greater terminology for key trading:

Shares: Entering the amount of shares that is wished for trading. It is required to be a whole number at a must, since the markets of centers do not accept the orders of shares in fractional form.

Symbol: In this, the symbol or the ticker of the trading will be entered for a security of traded public.

After this, you will have to choose the kind of order that would be liked for being entered. Some of the choices are given below:

Market order: This is either a sell order or a buy order that is supposed to be executed at the price which is considered to be the best available presently in the market openly. you have got a guarantee for the execution immediately, but there is no particular price. When a person enters an order of market for buying, he is required for paying attention for asking the price on his quote of stock. If a person is selling, he is required for paying attention to the price of bid. As it is a fact that an order of market is not supposed to guarantee a price, you are required to be aware that there could be chances for the price to move in any direction before the market order gets the floor for trading.

Limit order: For the people who buy, this is such an order for buying the stock either at or below a particular and specified price. For the people who sell, it is an order for selling either above or at a particular price; this price is called the limit price. Limit orders will only supposed to be executed only at a particular price or the condition can also be like the price moves in a favorable way for the either the seller or the buyer; it will get executed automatically at the available value that is considered to be the most advantageous.

There is a tradeoff for the protection of the price of an order that is limited and is supposed to be the possibility that won’t get executed in the case if the market is not reaching the specific price.

Stop order: This is an order of market that is to be either bought or sold if a particular price is either passed or reached; this price is called the stop price. When the stop price is supposed to be reached, the order is to be executed in the market.

Stop limit order: This is such an order that is for buying or selling a particular security at a specific price, only after the time when the stop price is already reached. A stop limit order is such that it is necessarily a combination or mixture of a limit and a stop order.

Day order: An order that is to be bought or sold and is automatically expired if does not get executed during the session of trading. All the orders of market are supposed to be set to Day automatically.

GTC: GTC stands of Good Till Canceled, it is an order to be bought or sold that remains affected until it is canceled or is executed.

Some of the words on qualifiers:

Qualifiers are basically instructions that are considered to be optional and can be added to a specific order by you.

Placing an option:

In 1973. the doors of Chicago Board Exchange were opened. Since then the options are considered to have grown tremendously in the perspective of popularity. Presently, it is quite easy than ever before for the retailers and the investors for the online options for trading.

Options are basically the contracts that are given to the owner for giving the right for buying or selling a particular asset on a fixed price for a particular time period, this is called the strike price.

Types of options:

Basic all there are two types of options, i.e. calls and puts. If someone is buying a call, it means he has the right for calling the stock that is underlying away at the price of strike. If somebody is buying a put, he has the right for putting the stock to somebody at the price of strike.

The process if entering an option trade through the internet is very much similar to enter a stock trade through the internet. However, there are some of the basic differences.

Key option terms

Followings are some of the key terms that related to the trading options.

  • Buy to Open

  • Sell to Close

  • Sell to Open

  • Buy to Close

Contracts: An option contract is supposed to represent 100 shares on ordinary basis of the stock that is underlying. You will be required for defining the contract numbers whenever there is a time for trade options.

Symbol: Each of the option individually will be having its own symbol for the ticker. You will be requiring to search that particular symbol and then enter it into the field of the symbol. You can also make use of several options offered by trade King for selecting the option that is desired to be sold or bought.

It is a chain which is called the option chain. It will enable you for seeing the symbol of the ticker at each of the strike price.

Wishing the luck to be good out there

The stocks of trading and the options on the inter-net or online are supposed to be providing you a great extent of flexibility at a cost that is overall considered to be lower in comparison to the traditional broker of stock.

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