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Explaining Share Dealing to Beginners

June 01, 2012 | Comments: 0 | Views: 143

Beginners have a lot of things to understand about share dealing when he or she decides to enter this form of financial investment. If you are going to ask me, I highly recommend that you start in the four (4) most important aspects first. These are related to understanding what is the share or stock, the basics of share dealing, platforms where they can be trader as well as both of its pros and cons. These will be explained in the following sections hereunder.

Overview of the Stock Market

On the one hand, one of the first things that any trader-wannabe needs to know when it comes to share dealing is an overview of the stock market. In this regard and in a general sense, the stock market is like a platform where people, brokers and institutions can buy or sell stocks, which refer to an ownership of a company. However, market in this instance does not actually represent a physical place where trading takes place. Instead, what this refers is the market for securities in the sense that there is a demand for a specific security and indices.

The Basics of Share dealing

The basic principle of share dealing is similar to the ordinary trade or the "buy and sell" type of transaction. What this means is that a buyer will buy a security with an expectation that its value will increase in the future so that his or her dividend would be higher or it can be sold for a higher value. However, the rules and regulations governing this type of financial transaction are more complex than the ordinary trading. There are some specific rules that need to be followed within the whole process of share dealing.

Platforms to Trade Shares

With the developments and innovations in this field as well as in World Wide Web, there are already many ways that people can use in order to trade. Nevertheless, shares and stocks are primarily traded in the stock exchanges. However, you do not have to personally go there to be able to trade and make positions. You can hire a broker and you will just give instructions to them. Instructions can also be given through the internet and even in mobile devices.

Advantages and Disadvantages of Share dealing

Any trade needs to know both the advantage and disadvantages of this type of financial transaction. This is because this is the only way that anyone can assess if it is indeed beneficial for him or her. In this regard, among the advantages of trading shares include its rate of return, acquisition of assets as well as the dividend yield. On the other hand, its setbacks are the risks as well as the aspect of having enough knowledge to the market and its unpredictability.

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Source: EzineArticles
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