How does stock trading work? How do you make money? How much would I need to invest?

Answer 1

Share trading (or stock trading) involves buying the right shares, anticipating that you will receive (after tax of course) a nice profit. That profit may come through dividends (returns to investor made through the company's own profit) and/or selling the shares later at a higher price.

The value of shares rise because the company is *anticipated* to be more valuable, usually because of expected future earnings.

I would not invest in the share market until you have done some research on how shares are valued, and you have taught yourself not to trade on 'emotion'. Trade when you can afford to loose.

Answer 2

You start by opening a brokerage account. With a handful of exceptions, the only way to purchase/sell stocks is with an intermediary known as a "broker." They will charge you for the privilege, but rates vary.

You can think of the account as a "put and take" account, because in order to purchase stock, you need to fund the account. As long as you are "in cash" you can do whatever you wish with your money, including purchasing equities (stocks), mutual funds (if they are offered), options, etc. You can also withdraw your cash back out, using various means provided by the brokerage (mail a check, ATM-style withdrawal, EFT, wire funds, etc.)

There are many ways to make money trading stocks, but almost all of them involve selling at a higher price than you originally paid. In addition, if you hold dividend stocks, you can make money collecting dividends. In a way, it's kind of like renting out an apartment. You get paid to own a piece of a company, for as long as the company pays its shareholders.

As far as amount needed to invest, that depends on the brokerage. A minimum amount to transfer at once could be as small as $20 (sogoinvest.com, buyandhold.com), or as much as $25,000. Scottrade will open an account for you with a minimum opening deposit of $500.

Have fun learning!

Answer 3

It could be very complex to do higher than the marketplace common, even for the experts. The simplest technique to make a dwelling at the inventory marketplace is to begin with 1 bucks, make investments it in a inventory index fund, and reside off the 7 to ten% common achieve in line with yr, spotting that there can be higher years and years with a loss. But commencing with little or no and seeking to make adequate to survive will almost always require margin money owed (borrowing cash to speculate with) which make it a lot more most likely that you can lose the whole thing: no longer anything to simply mess around with.

Answer 4

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Answer 5

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Answer 6

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