Introduction To Global Stocks Trading

[donlucky]

Hello forumites,

Over the last few decades the Nigerian man's interest has grown towards investments especially on stocks buying, but have really taken out time to look out for investment vehicles located around the world?. Currently the average nigerian man's mind is gradually driven from the everyday hustling and bustling with no good result to show for it and it's gearing towards investing in other webbased business like Forex and global stocks which returns far higher than any other investment located in our locality because of some advantages they have over our local investment vehicles.

shortly am gonna be taking us through a comprehensive study of global stocks and how we can tap into it from the comfort of our bedroom with no strings attached.

................Welcome on board!

[donlucky]

INTRODUCTION

Wouldn't you love to be a business owner without ever having to show up at work? Imagine if you could sit back, watch your company grow, and collect the dividend checks as the money rolls in! This situation might sound like a pipe dream, but it's closer to reality than you might think.As you've probably guessed, we're talking about owning stocks. This fabulous category of financial instruments is, without a doubt, one of the greatest tools ever invented for building wealth. Stocks are a part, if not the cornerstone, of nearly any investment portfolio.
When you start on your road to financial freedom, you need to have a solid understanding of stocks and how they trade on the stock market.Over the last few decades, the average person's interest in the stock market has grown exponentially. What was once a toy of the rich has now turned into the vehicle of choice for growing wealth. This demand coupled with advances in trading technology has opened up the markets so that nowadays nearly anybody can own stocks.Despite their popularity, however, most people don't fully understand stocks. Much is learned from conversations around the water cooler with others who also don't know what they're talking about.

[donlucky]

WHAT IS A STOCK

This is a type of security that*signifies ownership in a corporation*and represents a claim*on part of the*corporation's assets and earnings.
There are*two main types of stock: common and preferred.*Common stock*usually entitles*the owner*to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated.*
Also known as "shares"*or*"equity". * A holder of stock (a shareholder) has a claim*to a part of the corporation's assets and earnings. In other words, a shareholder is an*owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have claim to*10%*of the company's assets.Stocks are the foundation of nearly every portfolio. Historically, they have*outperformed most other investments over the long run.

[donlucky]

ADVANTAGES OF GLOBAL STOCKS OVER LOCAL (NIGERIAN) STOCKS TRADING

There are several advantages of global stocks over local stocks trading, but we are going to let us have some very vital ones.

no.1 LIQUIDITY and AUTOMATIC- Unlike the Nigerian stocks, with the International stocks you don't need to worry about having issues with your broker, once you have created an account with a broker, you will be given a trading platform through which you can have a direct access to all the stocks traded in any stock market in any part of the world, no need calling your broker any time you want to purchase a stock , all you need do is click buy and it is bought and click sell and it's sold; withdrawal of your fund is automated, you do the buying and selling yourself.

no.2 LEVERAGE(MARGIN)- This is a multiplier on your trading capital or your buying power; for instance if you have $500 deposited on your trading account, and you are given a LEVERAGE of 1:2 meaning what so ever amount you have on your account is multiplied by 2(doubled). this means your $500 will then be reading $1000 on your trading account.* on the global stocks trading, the broker gives you a leverage in form a loan for free to enable you have a greater buying or dealing power on the market unlike our local stocks that you must have to buy a stock with only your real cash; this has make it so difficult for the low net worth individuals to actually buy our local stock.

no.3 TWO WAY MARKET- Unlike the Nigerian stocks trading, global stocks market is a two way market; some of us that have been trading the Nigerian stocks will find this as "too good to be true" but believe it on not, it's the truth, on global stocks one can buy a stock and later sell off to make profit, we can also short-sell a stock and then later buy back at a lower price to make profit, for short-selling, the different between your short entry and your buy back entry becomes your profit. it's almost the same thing like short selling in Forex trading; it's just that in stocks, it doesn't have to do with two currencies.
Note: If we sell a stock in an expectation to make profit if the stock falls deeper, it is called "shorting" or "short selling"

no.4 AVAILABILITY OF INFORMATION- with global stocks you don't have to scavenge for information as regards the stocks you bought or intend buying; through the research engine of your broker's trading platform like pectstocks, you can research for the general information and updates of that stock you intend buying or selling with no hassles which we know with the Nigerian stocks it is difficult.

[donlucky]

HOW STOCKS ARE TRADED

Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. You've probably seen pictures of a trading floor, in which traders are wildly throwing their arms up, waving, yelling, and signaling to each other.



the picture below is a typical trading floor

[donlucky]

The other type of exchange is virtual, composed of a network of computers where trades are made electronically.
The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing. Just imagine how difficult it would be to sell shares if you had to call around the neighborhood trying to find a buyer. Really, a stock market is nothing more than a super-sophisticated farmers' market linking buyers and sellers.
Before we go on, we should distinguish between the*primary market and the secondary market. The primary market is where securities are created (by means of an IPO) while, in the secondary market, investors trade previously-issued securities without the involvement of the issuing-companies. The secondary market is what people are referring to when they talk about the stock market. It is important to understand that the trading of a company's stock does not directly involve that company.

[donlucky]

WHAT CAUSES STOCK PRICES TO CHANGE

Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike another stock. This comes down to figuring out what news is positive for a company and what news is negative. There are many answers to this problem and just about any investor you ask has their own ideas and strategies

That being said, the principal theory is that the price movement of a stock indicates what investors feel a company is worth. Don't equate a company's value with the stock price.
The value of a company is its market capitalization, which is the stock price multiplied by the number of shares outstanding. For example, a company that trades at $100 per share and has 1 million shares outstanding has a lesser value than a company that trades at $50 that has 5 million shares outstanding ($100 x 1 million = $100 million while $50 x 5 million = $250 million).
To further complicate things, the price of a stock doesn't only reflect a company's current value; it also reflects the growth that investors expect in the future.

[donlucky]

TYPES OF STOCK

We have three major kinds of stocks in the world today, namely: Blue-Chip stocks Mid stocks and Penny stocks.
BLUE-CHIP STOCKS
A*nationally recognized,*well-established and financially sound company. Blue chips generally sell high-quality,*widely accepted products and services. Blue chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable*growth.
The name "blue chip" came about because in the game of poker the blue chips*have the highest value.

CLASSIFICATION

The Blue-Chip stocks have just two classifications; the Mega CAP and Large CAP
Mega Cap
These are companies that have a market capitalization greater than $200 billion. * These are the big kahunas of the financial world. Examples include Wal-Mart, Microsoft and General Electric.

Large Cap (Big Cap)
A term used by the investment community to refer to companies with a market capitalization value of more than $10 billion. This is an abbreviation of the term "large market capitalization". Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share. *

THE MID STOCKS
These are stocks that are considered riskier than blue chips because they have a smaller market capitalization.

CLASSIFICATION
The mid stock is classified into two type; the Mid Cap and Small Cap stocks.
Mid Cap
This is a company*with a market capitalization between $2 and $10 billion, which is calculated by multiplying the number of a company's shares outstanding by its stock price. Mid cap is an abbreviation for the term "middle capitalization". As the name implies, a mid cap company*is in the middle of the pack between large cap and small cap companies.*

SMALL CAP

Refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million*and $2 billion. One of the biggest advantages of investing in small-cap stocks is the opportunity to beat institutional investors.
Note:-Both Mid Cap and Small Cap stocks are considered the same since they both carry almost the same level of risk and have less capitalization than “Blue Chip”.


PENNY STOCKS

In the U.S. financial markets, the term penny stock commonly refers to any stock trading outside one of the major exchanges (NYSE, NASDAQ, or AMEX). However, the official SEC definition of a penny stock is a low-priced, speculative security of a very small company, regardless of market capitalization or whether it trades on a securitized exchange (like NYSE or NASDAQ) or an "over the counter" listing service, such as the OTCBB or Pink Sheets. The terms penny stock, micro cap stocks, small caps, and nano caps are also all sometimes used interchangeably.

CLASSIFICATION

The penny stock is classified into two types and they are namely: the Micro Cap and the Nano Cap.

Micro Cap
These are companies*with market capitalizations between $50 million*and $300 million. A micro-cap stock isn't the smallest classification*- nano cap is even smaller.
Nano Cap
Small public companies having a market capitalization below $50 million. This is as small as you can get! Nano caps are very risky because they are such small companies.
Keep in mind that classifications such as "large cap" or "small cap" etc. are only approximations that changes over time. Also, the exact definition of the various sizes of market cap can vary between brokerage houses.

[donlucky]

INTRODUCTION TO PENNY STOCKS

In the U.S., penny stocks are common stocks that trade for less than $5 a share and are traded over the counter (OTC) through quotation services such as the OTCBB or the Pink Sheets. Although penny stocks are said to be "thinly traded," share volumes traded daily can be in the hundreds of millions for sub-penny stocks. Legitimate information on penny stock companies can be difficult to find and that’s why it’s expedient you seek for the help of pros before embarking on action, And all you have to do to get that help is subscribe to their services.
Our approach to picking winners in penny stocks is strictly tailored for shares that trade from 1 cent to $5.00. In this "investment territory.Besides getting involved in only the healthiest companies, you will be able to benefit from the absolutely quick and massive gains that penny stocks provide.