Welcome to the stock market
Don’t let the title fool you, I do not intend to post every week a column on investing – rather – I intend to post some information I have picked up as someone who dabbles in trading on a weekly basis.
The intention is to unveil information that is essential for the casual investor, or share some pointers for those interested in investing!
lets start at the beginning…
What is the stock market?
If you have a quantity of anything that can be sold, you have something in “stock”. A registered business itself can be bought and sold, as well as divided into different sellable quantities.
Each (equal) division of a business is considered a “share” and the process of selling those shares in quantity and publically are done formally through a stock market.
The market I use primarily is the Toronto Stock Exchange because it’s the market most local to me --- there is usually no issue with trading internationally and I dabble in other “exchanges/markets” from time to time. Just be aware that foreign ownership tax rules, legal limitations, and currency exchange comes into play when you trade abroad – so if you are starting out, stay local.
How do you trade stocks?
To access the stock market you will need a “broker”. Only brokers are allowed to buy and sell stocks in a process called “trading” and how this process is done is quite magical and completely unknown to me. All I picture is a big group of guys on a dance floor waving papers in the air yelling out numbers. Anything less would be disappointing. How trades are done should be none of your concern, it is more important to identify which broker/brokerage firm you use as they will facilitate the trading on your behalf.
For casual investors, here is a list of online (discount) do-it-yourself brokerages you should use:
Yes, that’s it. I shopped around and the fees embedded on other services are too overwhelming and complicated to keep up with. TD is simple, $10 per trade. No annual fee, no monthly fee, no minimum trade fee, no maximum trade fee, and very few conditional fees.
Remember the act of buying and the act of selling stocks/shares of a company is considered a “trade” therefore you should always factor in the brokerage fee twice, once each for when you buy and when you sell stock.
If you want to make any corrections, or have any suggestions for anything I wrote above. Leave a comment.