How do stocks work and at least how much do you have to put in?

Question

im just a teenage and i've always been wondering how stocks work and stuff. all i know is that you put some money into a company or something and it either rise or drop... i might be wrong and im guessing.

can someone explain how to all works and do you have to put a LOT of money into it? ty!

Answer 1

Stocks are shares of ownership in a company.  A stocks value is determined by how profitable the company is; there is a little more to it but this is to keep things simple.  Stock prices fluctuate because peoples beliefs about how well the company is doing changes all the time.  To purchase stocks you should open an account with a local brokerage firm (scottrade, aig, ect.) and then find a stock thats share price you can afford.  I suggest that you at least have $500-$1000 to start your account because you don't want to purchase only on share of any stock.  You will have to pay a fee for each trade, so if you buy 1 share of a stock at a share price of $100 and you pay a $7 trade fee the stock price has to increase to over $107 before you make any money.  So, its helpful to purchase more shares so you can smooth out the fees charged on each trade.