How Are Stocks Sold?
Stock is sold by companies in two ways: publicly and privately. Private company stock is sold among individuals without the use of an exchange. Publicly traded stocks are sold on exchanges and can be traded online with the click of a mouse, or by using the services of traditional stockbrokers.
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Traditional Broker
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A licensed broker buys and sells stock on your behalf, charging you a commission. The broker can advise you about what stocks to buy or sell and when, and he can give you other investment guidance. His commission usually is higher than the cost of an online broker.
Online Broker
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When you buy or sell stocks through an online broker, you also pay a transaction fee. However, since you do not receive advice from the online broker, that fee is usually significantly less than the commission to a traditional broker.
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Long Strategy
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Selling long means you purchased the stock with the anticipation of it increasing in value at a later time. Once the stock value reaches a favorable level you sell it, hopefully for a profit.
Short Strategy
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Shorting is a way to profit if the value of the stock is expected to drop. You in effect borrow, or short, the stock, and the price is credited to your account. When the price drops, you then sell the stock; if the selling price is lower than what you borrowed it for, you keep the difference.
Bid Price
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Stock quotes are listed with an ask price and a bid price. The bid price is what someone is willing to pay for your stock if you sell it.
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