Earn Profits From Your Stocks – Basics About Trading

Stocks are all the stocks in which ownership of a company is divided up. In American English, the stocks are collectively called as “stock.” A single share of stock represents a fractional ownership in percentage shares of a company. Within this fraction are known as the stocks.


Stocks can be both common and preferred. Common stocks are the stocks that are listed on over the counter market. A preferred stock on the other hand is one that is listed publicly and traded on an exchange like the New York Stock Exchange (NYSE) or NASDAQ (national association of securities dealers).

There is a major difference between the two. For common stocks, ownership is transferable and is done through a direct ownership document. This transfer can take place only once and hence the name common stocks. Preferred stocks on the other hand do not transfer ownership in the document but are normally dividends paid by the corporation. The dividend payment is however dependent on the profits earned by the corporation.

There are certain rules that govern ownership of stocks and shares in companies. Once you buy stocks, you are given a limited power of ownership. You can only buy shares that you can personally invest in and that too in a very cautious manner. You cannot, under any circumstances, buy shares to invest in your own company unless you hold more than 25% of its equity.

If the price of stocks goes up, you can increase your holding of them by exercising your right of ownership. You need not pay any dividends apart from the distribution fee which is usually paid to you on a yearly basis. Normally the distribution fee is charged as well as paid by the company irrespective of your holding of stock shares. It is important to note that if the dividends paid are less than the cost of your dividends then you will profit from them.

If you have accumulated your share portfolio, you need not always think about the purchase and sale of stocks. Instead think about other alternatives that can earn money from your investments. You can opt for a mutual fund in order to earn more interest on your invested money. You can also opt for commodities and bonds to earn a fixed rate of interest. However, it is important that you always keep an eye on the trading hours and be well informed about all the happenings in the market before you decide to trade.