Stock Trading For Dummies – Overview
Stock trading for dummies recommends that you understand the following salient points about stock trading to be used as a very simple primer and certainly not an in-depth study of stock trading:
- Stop/Loss
- MIP
- Equities
- Alternative Mutual Funds
- Bonds
- Dollar Cost Averaging
Stop/Loss
In essence this is a controlling automatic limit that you can put on stocks. For instance you may wish to put in a Stop/Loss for 10% of what you paid for a stock, so that should it reach a 10% loss your broker will automatically sell it for you. The reason that it is called a stop/loss is that it will stop losses from occurring quickly while you are asleep or on vacation for example.
MIP
Stock trading for dummies highly recommends this particular investment tip. It stands for Monthly Income Plan, and what it means is that as an investment plan it doles out a monthly amount of income. Obviously it is perfect for senior investors, who ordinarily would have no monthly income except perhaps a Social Security check.
Equities
Granted you may have equity in a house which means the difference between what it would sell for as opposed to the money you owe on the home, but in stock trading for dummies, it means a type of investment strategy that uses only equity securities. What happens in this particular case is that one company invests in a particular stock that has actually been issued by yet another company.
Alternative Mutual Funds
Hedge-like mutual funds will adopt alternative strategies. The reason they are called alternative mutual funds is that to invest in actual mutual funds, one needs to be an accredited investor. These mutual funds on the other hand mimic mutual funds in process except that these funds are less volatile.
Bonds
Investing in bonds is often suggested as an investment strategy because they are generally a low risk method considered as most stable to diversify one’s portfolio, thus is recommended for stock trading for dummies. Of course the crux of the matter is, as it always has been, is knowing which types of bonds to invest in and when to do so.
Dollar Cost Averaging
Put quite simply in the description of online or penny stock trading for dummies, it is the systematic investment of a specific amount of money invested at regular intervals and this is ordinarily done in this manner for a long period of time. Ordinarily this is a plan that will go on for 5 to maybe 10 years.
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