Stock Trading
Stock trading broadly refers to any buying and selling of stock, but is colloquially used to refer to more shorter-term investments made by very active investors. Stock trading is a difficult and risky enterprise, but with education, you can work to lower risks and increase your likelihood of success.
Guide to Stock Trading
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The bid price is the highest a trader is willing to pay for a stock and the ask price is the lowest someone is willing to sell a stock for. The quote is the price of the most recent sale.
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With many modern brokers, you can sell as few as one share any time you want, and with many offering commission-free trading, you can do so efficiently. Some brokers go a step further and allow you to purchase fractional shares, so you can purchase less than one share.
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Yes, though, for most investors, only up to a certain point. If a stock’s trading volume is very low, it can be difficult to find someone to buy or sell shares for when you want to trade. This can dramatically increase the cost of trading that stock. However, for most retail investors, all large cap and most medium-cap stocks, as well as even many small-cap stocks, have more than enough trading volume for your purposes.
Learn More Is a Stock's Trade Volume Important? -
The name “Wall Street” comes from a street in downtown Manhattan in New York City where the New York Stock Exchange (NYSE) is located. The importance of the street to the financial industry dates at least as far back as 1792, when the Buttonwood Agreement created the stock exchange.
Learn More Where Does the Name "Wall Street" Come From?
Key Terms
- Position
A position is a quantity of an investment that a person or organization owns or is shorting. Positions can be either long, with the holder betting the investment will go up, or short, with the investor hoping it will go down.
- Class B Shares
Class B shares are a type of common stock. They usually have a different level of voting rights than A shares, but whether that is more or fewer varies by company.
- National Best Bid and Offer (NBBO)
NBBO is a quoted stock price for an investment that has the lowest ask price and highest bid price. It is based on information from all stock exchanges and other trading venues.
- S&P/TSX Composite Index
The S&P/TSX Composite index is a capitalization-weighted stock index of 230-250 of the largest stocks on the Toronto Stock Exchange. It is comparable to the U.S.’s S&P 500 Index.
- Inflation Trade
An inflation trade is an investment made to profit from high or rising inflation. An example is investing in commodities, which usually rise in times of high inflation.
- Cooling-Off Rule
Cooling-off rule can refer to SEC regulations concerning stock or bond issues. It can also refer to a required three-day return period for some purchases or a restriction on government employees from lobbying once entering the private sector.
- R
In the context of stock trading, when R is added to the end of a ticker symbol on the Nasdaq exchange, it means the security is a rights offering. In financial mathematical models, it is usually used to refer to rate of return as a variable.
- Bear Raid
A bear raid is a type of stock manipulation in which short sellers will attempt to push down the price of a stock through untrue negative rumors and aggressively shorting the company. This is illegal and distinct from shorting a company and releasing correct research that may affect the stock price.
- Desk Trader
A desk trader is someone in the financial industry that buys or sells investments for their clients. Desk traders must be registered with the Securities and Exchange Commission in the U.S.