How does buying stock work exactly?

Question

I'm looking to purchase about $300-$500 worth of stock, mainly just for fun, and was wondering how exactly does that work. I know you have to go through a broker or a site like scotttrade.com, but heres an example. Say I buy 4 shares of whatever company for $50 a share. Let's say 3 months from now each share is worth $100, can I just go and sell those shares if I want to? And then from there, how does it work? Once I sell those shares do I just get mailed a check for the amount of its worth?

Answer 1

yes

Answer 2

When you buy 4 shares of a whatever company for $50 a share, the broker will purchase them for you and charge you with some commission.  Later when you sell your four shares at $100, the broker will sell them for you and charge you with some commission again.  Your total profit will be $200 ($50 per share for 4 shares).  However, you will have to subtract the commission from this amount to get your total net profit.  Your money will be in your brokerage account.  You can withdraw your money and have a check mailed to you.

If you are looking to only purchase about $300 to $500 worth of stock, you will need to find a broker with no account minimums.  I believe that Scottrade requires a $500 minimum deposit.  However, I currently use Firstrade ( http://www.firstrade.com/ ) and they do not have any minimums.  Their commission rates are slightly cheaper as well.  I definitely recommend that you check them out.

However, I would not recommend using Zecco. First of all, their 10 free trades per month deal requires you to deposit at least $2,500. Plus, their website is very hard to use, definitely not beginners. They may seem cheap, but they charge all sorts of unnecessary fees for other services.

Answer 3

It works pretty much as you have described it -- except for the part where you buy the stock for $50/share and sell it three months later for $100/ share.  That does happen, but not often.  Keep in mind that every time you trade, you incur fees and you have to pay taxes on capital gains, so look for stocks that you can keep for a longer time.  Day traders, those people who do a lot of short speculative trades, do well in a really hot economy but not so well in a downturn.

Answer 4

Think of the broker as a bank account, you will be buying stocks or funds thru your acct, and when you sell, the profit goes back into it, and yes you simply request a check from it when you need the money.I recommend an online brokerage firm that has good beginner qualitys {like tutorials or an easy to understand set up}, i use zecco, better then schwab, etrade, etc. they are the only ones with free stock trades, no minumums..all the others will charge you fees for trading, but compare and see for yourself. Good luck and happy investing!

http://friends.zecco.com/r/a7a2877caab81...

Answer 5

yes. idk. idk that either

Answer 6

Obvious, but important remark: keep in mind any trading will trash your ability to go 1040ez if you want to deduct loses.

And yeah, that's exactly how it works.

Just don't end up doing the gambler's woe: Shoulda, woulda, coulda...

Answer 7

That's how it works. Don't forget to allow for commission, jobbers turn (difference between buying and selling prices, any other costs.The profit could either be retained on your dealing account or paid by cheque or electronic transfer.Have a look at the questions page on http://www.shareworld.co.uk