Before rushing out and buying stocks on the advice of a friend who dabbles with stocks and has made some money, learn about the process. Learn while putting back a little money each paycheck; financial advisers recommend this be money that could be lost without fear of having the children go hungry or barefooted. In other words treat this new venture into capital trading as a gambling urge and keep money allotted for it separate. Instead of actual getting involved even though the urge to jump in and interact is great; at first learn.
Process of learning
Technology has made learning about how to busy stocks easier and games has made it lots of fun. For fun and excitement and for those who like to play games, Investopedia’s Stock Simulator or one of the other games that will give hands on experience without players having to put any money down. Beware however that this is free but there may be enticements from the sponsors to get players more involved. Use their play money but keep the real stuff in the safe until you’ll learned how to keep your life savings safe from sharks.
Think Quest has a tutorial designed to teach future investors how to maneuver around and through financial markets. Interested students will learn the fascinating history of Wall Street, how they’ve progressed through the years and will learn each segment: stocks, bonds, how to read symbols, how to speculate, when to buy, when to sell and how to expect to lose gracefully. And all big dealers do from time to time lose money; the idea is not to lose more than you started out with.
From then to now
It’s always good to learn the history of whatever company that will be ‘aiding and abetting’ you in your financial dealings; Wall Street is no difference. According to Think Quest Wall Street started out “as a dirt path in front of Trinity Church in East Manhattan 200 years ago.” They had only silver to trade for incoming cargo; no actual paper money was laid down.
The paper said they owned the goods and the owners were attempting to make as much on their speculative goods as was possible. This method seemed more lucrative than the sweaty and heated dock auctions that usually led to buying and trading; and too, it was more gentlemanly.
Now Wall Street is even more prestigious and more of a lofty and frightening venture than at its beginning and yes, even more reckless now than then. Wall Street is not for beginners and only the very best companies can join their ranks as stock companies. Buyers, or more direct language, the gamblers, have more leeway. More companies have become available and it’s now possible to trade with smaller amounts of money.
Trading other than Wall Street
“Today, the New York and the American Stock Exchanges, have been joined by the NASDAQ, and hundreds of local and international stock exchanges, that all play a part in the national and global economy.”
How stock trading works
In theory at least stock trading is simple arithmetic. A company starts out —presumably— by owning 100 percent of its company, locks stock and barrel. Then to get more money for advancement or to expand into other areas, they sell shares in their company. The dealer owing more fifty percent or more of the company is considered the owner, or in situation with conglomerates, at least the boss.
You can’t really buy stocks outright from the company but through middlemen, or salesmen who’ve created their own business by acting as spokesmen for Wall Street and other stock market venture enterprises. They make their money by adding to the price of the stock their fee. The message doesn’t stop there, they send your request to the floor broker and he buys the stocks for you. That sounds complicated and actually it is.
The floor broker will go the area of that business and will select one buyer to do business with. The broker will keep records of all your transactions and if you want to sell you must allow him to sell for you. Why? He must pay his rent too and this is his life work. And yes, you’re wondering, how can he stand all that clatter and noise of the floor? He just does and his worries matches yours about how much he’s made at the end of his day.
How to start
Now is the time to relieve your stress and whet your appetite with simulated games, as mentioned above. Mix that in with learning about trading with mutual funds; the rules of trading; learn what precipitates stock market crashes, how it reacts to trends and everything you ever wanted to know about stock trading.
After your course of study and several years on down the road, whether or not you’re still as keen on stock market trading and playing with the big boys or not, you’ll agree the lesson was worth the time spent. And think of all the money saved and the fun you had with the games. Okay, so you lost most of the games, but found the challenge just what the doctor ordered to calm your jagged nerves.
What money saved you ask, most of it went for games and shoes for the kids and yes, a family vacation. Good choice, most any of today’s professional money handling experts would say. Not everyone is cut out for cut throat dealing or living life on Wall Street.