Guide to Essential Money Tools

Investing Tools

Trading equities - a beginner's guide

Stocks and Shares
A stock exchange is an organisation providing a marketplace (either physical or virtual) for trading shares.

This is where investors may buy and sell shares in a wide range of companies.
A given company will usually list its shares in only one exchange by meeting and maintaining the listing requirements of that particular stock exchange. In the United States, through the inter-market quotation system, stocks listed on one exchange can also be bought or sold on several other exchanges, including relatively new internet-only exchanges. 

Buying stocks and shares
There are various methods of buying stocks. The most common is through a stock broker. There are many different stock brokers from which to choose such as full service brokers or discount brokers.

However, they are all doing one thing – arranging the transfer of stock from a seller to a buyer. The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades. Another type of broker would be a bank or investment company that may have a deal set up with either a full service or discount broker.

Selling
The procedure for selling stock is  much the same as for buying. As with buying a stock, there is a fee for the broker’s service in arranging the transfer of stock from a seller to a buyer.

This fee will be dependant upon the type of broker service, discount or full, undertaking the transaction. After the transaction has been made, the seller is then entitled to all of the money.

An important part of selling is keeping track of the earnings. Importantly, on selling the stock, investors living in jurisdictions that impose capital gains tax, must pay this out of the profits.