Stock trading is a form of investment in the financial market where money can be invested in stocks of a particular company listed in the stock exchange market, and the money may give returns or losses depending on the rise or fall in the value of the stock in a given period of time.
Stock trading can be done by both individuals and by big companies, although the strategies employed by the two are vastly different from each other, mostly due to the ability of a company to invest much more than any individual person.
When companies take part in stock trading, called Institutional trading may have their own individual capitals to invest in and then sell at a profit to increase the net income of the company. They have a team of dedicated professionals and are experts in this field, with high level predictive algorithms working round the clock to predict the rise and fall of the market and distribute investments likewise.
These companies never invest in one single type of shares, but rather distribute their capital among a number of shares and investments, so that losses in one sector can be balanced out by profits in another, and the net income from the share trading is never affected by bad market trends.
Contrary to popular belief, individual stock traders can be highly successful too, given that they plan properly and invest smartly. For any individual stock trader trying out their hand in the stock trading business, the most profitable and safest way of starting would be investing in penny bonds, which are bonds of low value and low risk.
Once the individual becomes confident in their strategies and also has developed a sufficient amount of capital to invest in, they may go on to invest in larger shares, provided that they can plan properly and device a strategy that can minimize the risk involved and maximise the profit margins for an individual stock trader.
To help such individual traders make the correct decision in the stock market, there exists many consultancy firms which provide all round assistance and proper guideline to be followed to both novice individual traders and more successful businessmen, depending on their needs.
These firms, or brokers, can also invest an individual’s capital for them in the right fields, so that an individual trader or investor has to never worry about following the market trends or making the correct decisions, since the brokerage company will take care of it. The only drawback of this system is that these brokers work for a commission and also charge a fee which can be very hefty for small traders or new traders with lesser capital.
Thanks to the advent of the internet, some companies like Wisdom Capital provide discount broker services, which is a stock broking service that carries out small deals and buying and selling solutions at a much reduced commission rate. Unlike full time broker firms, they do not provide all round assistance, but their services are affordable and are perfect for individual and new traders looking to make an introduction into the stock trading business.