Tips to Buy and Sell Stocks Online

Before you jump into buying stocks you'll need to know how to place a trade. Placing the trade is easy, getting the best price could be a different story.

When you are ready to buy or sell a stock you log into your brokerage account. You can also call in your trades to the brokerage firm but they will charge a lot more, AND you may not get the best price. Once logged in you go to a page designed for placing your trade. You enter information such as the stock symbol, how many shares you want to trade and whether you are buying or selling.

If you don't already know this, you can BUY stocks (and you hope the price rises so you can make a profit) or SELL stocks. When you sell, you could be selling stocks you own to lock in a profit or to exit a trade gone badly. In addition to that, you can also sell stocks you don't have! Therefore the brokerage company needs to know if you are selling your stocks or selling stocks you don't have.

The reason you would sell stocks you don't own is to make money off of the drop in price of a stock (which is a popular way to trade in 2008). For example, XYZ is at $50 a share. You think the stock is going down so you sell the stock and get $50 a share for each stock you sold. This sounds like free money. You sell 100 shares you don't have for $50 each and you get from your broker $5,000 put into your account. Do that every month and you have a nice income correct? Not quite.

In reality, you have to borrow shares from your broker in order to sell them to someone else (remember, there is always another trader on the other side of your transaction). Eventually your broker will want his shares back. At that time you will need to buy the shares back. If the stock went done in price to $30, you just pay $3,000 to buy them back and keep your $2,000 profit. On the other hand, if the stock goes up to $60 instead, you need to buy back at $6,000 and take a loss of $1,000.

As you can see it is possible to make money on stocks whether they go up or down.

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