A stock broker, stock trader, or equity trader is a private individual or business involved in trading stock certificates or equity securities for others. A stock broker can also be a direct agent, an intermediary, or a speculator. These days, […]
A stock broker, stock trader, or equity trader is a private individual or business involved in trading stock certificates or equity securities for others. A stock broker can also be a direct agent, an intermediary, or a speculator. These days, such equity trading even in large publicly listed companies can be done via a stock market. One of the advantages of trading via a stock market is that it is a liquid financial arena. However, such markets are not for everyone.
Such markets are for those people who can profit by making quick speculative moves in the marketplace. For example, shares of certain companies tend to appreciate in value faster than other companies’ shares. A stock trader who can spot such opportunities can make a lot of money by cashing in on such fluctuations. However, these kinds of trades require immense concentration and higher patience than the kinds of trades made via stock exchanges.
Share trading can be very risky. Potential investors need to realize this risk and take steps to mitigate the effect of losses. By investing in the underlying assets through trading, one can gain immediate profits but this profit comes at a cost as well. In other words, trading shares involves risks.
There are several types of capital markets used for share dealing. Some of these include: open-end capital markets, closed-end capital markets, and spot markets. Open-end capital markets provide more freedom to the share dealer to deal with large amounts of capital. On the other hand, the close-end capital markets tend to limit the freedom of the trader.
When investing in the share trading market, one must keep in mind that profit and loss are the two sides of the same coin. If you choose to buy a stock that is going up, then you have to sell it before the price goes up. However, if you choose to sell it, you will also incur some losses. This means that the key to making profits in the capital market is proper money management.
The main advantage of share dealing is that there are no commissions or fees associated with it. This means that the trader gets to reap maximum profits without having to pay a penny to any broker. This makes share dealing popular among small investors and even small traders. One of the disadvantages of this kind of trading is that the markets are highly volatile and could end up at any point of time. For this reason, professionals are needed to ensure that the investments being made are not lost.