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As you can see, we have covered a lot of ground over all these
chapters. Right now you are armed with enough information to be,
well, dangerous! Don't get us wrong, we are making a joke here, but
the fact is that no one should start to actually trade until
This gets a bit funny sounding, but it is a tactic that we as
traders use very frequently. You will have the ability (once you
open your brokerage account) to sell a stock you don't even own,
and the money for the sale will show up in your account!!
Options: Options are the right but not the
obligation to buy a stock at a certain price for a specified amount
of time. When you buy an option, you really don't want to exercise
that option; you want it to increase in price and then sell it.
Call Options increase
The next little "gem" that you have to be aware of is something
called a GAP UP or a GAP DOWN opening. This can be either the best
thing you have ever seen, or a horrible nightmare depending on
which one you get! Here is the deal:
Let's suppose you
We hope that you are beginning to see that there isn't too much
to doing this, just knowing a few terms and how to use them. So
far, you now know what the market is, what a stock is, a spread, a
limit order, a good till cancel order, an
There is another spin you can put on the limit order called the
"good till cancel" or GTC. That just means that they will
electronically book your order for about 60 days, and if it is
possible to buy XYZ at 53 or below, they will. You won't even
The previous example was trading at it's basics, and there are
many "tools" available to us that we use to help limit our risk.
One of these would be the "limit" order. Here, what we do is tell
the broker that we want to buy XYZ with a limit of
Now that you are armed with that knowledge, you are going to
want to buy your first stock. That is where our newsletters,
NEWSPICKS and INVESTMENT OPPORTUNITY PICKS, come in handy. They
will give you an idea of what might be a good bet. But let's say
you like XYZ
Next on the agenda is understanding how a buy actually works
before we make that first call and start trading. There are a
couple of terms you need to learn.
Once you know the name of the company and the ticker symbol,
next you need to find out the price
Now that you have a broker picked out, what is the next step?
Well, that would be to actually open a brokerage account with them.
This is how it all works:
The brokerage will send you an application in the mail that you
need to sign and return. Along with