Trading stocks means buying and selling small shares of companies making a portion of their business available for the public to purchase. As with purchasing anything in a marketplace, getting started means having some cash or credit. Getting started in the stock market can be as large or as small an endeavor as you may want to make.

Where Do I Trade Stocks?

Although we refer to the stock market as "Wall Street," a street in New York where there is a large stock exchange, there is no need to go there to trade stocks. The best place to start trading stocks is to contact your bank. Since changes in regulations, banks in America can now take orders from customers to trade a stock, whether it's buying a stock or selling a stock already owned. Another place to trade stocks is researching businesses with websites on the Internet. These companies will take your order to buy or sell, take care of the order and then charge you for the cost of the stock plus a commission for them doing the work. Usually, these companies require a cash deposit or the ability to draw money from a bank account or credit card. When contacting banks or online brokers about trading stocks, ask if they have any limitations on volume, price or credit rating of the stocks that interest you. Not all business will trade in all stocks. Check first before opening an account.

How Much Money to Trade

There are stocks for sale that cost .0001¢. That means you could buy 100 shares for a penny. Other stocks like Google or Warren Buffett's Berkshire Hathaway company trade for several hundred or several thousand dollars for one share. What is probably best is to determine if your bank or stock broker requires a minimum account balance. Also, be sure to always have enough money in the account to not only buy the stocks you want but also to pay any commission or fees paid on the transaction. Some companies charge for buying and selling, some for one or the other. For example, you may want 10 shares of a company costing $10 a share. You have $100 in your account. Is this enough? If there is a commission on buying a stock then no, you need to put more money in the account. An easy number to remember is whatever the whole dollar amount is of your stock trade, make sure an additional 10 percent is in the account

After the Trade

Stock trading is taken care of in computers and stock exchange records. If you buy shares in a company do not expect to receive in the mail some stock certificates. Also, if you sell some stocks there is nothing you need to provide to the person or company that buys your shares. When you buy a stock, your account is debited the amount of money needed to do the deal. After the trade your portfolio will reflect your new shares. A portfolio is a listing of all the shares you own. When you sell the stock, the money is deposited into your account and the listing is changed or removed from your portfolio depending on whether you sold some or all of your stock shares. If you sell the stock for more than you paid for it, more money will be deposited than you paid. If you sell the stock for less than you paid for it, you will lose money and less will be deposited. At the appropriate time of the year your bank or broker will provide you with a year-end statement of your profit and losses for your tax preparation.

Source:

Market Watch: Getting Started; stocks

Sec: Investor Information