Types of Trading??

Hello once again. Let me note that NOT everyday will there be a post. My plans are to have a new post every other day. The reason for this is to save a little time on my part, but for your sake, if you arn't able to read the day's post, then you would still have an extra time to catch up.

Anyways, today (or maybe next time) I am going to talk a little about types of trading (hence the title), a few different orders that can be used to save YOU money when buying/selling stock and the different types of investment. Hopefully by the end of the post you will understand a few more things. I will try my best! ;)

There are many types of trading . One for example is just buying a stock in hopes of the stock rising in price, then selling. (earning profits when stock price rises). Another type of trading is called, Short Selling. When you short a stock you are betting against everyone else, betting the stock will drop. Selling a stock "short," means earning your profits when a stock drops. I use both of these techniques in trading.

I wont go into much detail about another type of trading called "options trading." Infact, i havn't even learned much about it yet.

"What do I invest in?" Here are a few things-

• Stocks
• Bonds
• REITs (real estate investment trusts)
• Mutual Funds
• ETF's (Exchange traded funds)

I am going to leave out a few of these in regards to hopefully minimizing the confusion later on.

First, lets get stocks out of the way. Like i said in my previous post, stocks are ownership of a company. But remember, a stock is just ONE company. At this stage, i trade ONLY stocks and ETF's (which we will talk about later).

Mutual Funds are hundreds and hundreds of stocks in one investment. Mutual funds are alot less ricky compared to stocks. The funds are "divisified" unlike buying shares of ONE single company. Being diversified among many investments creates less rick, but less reward. Remember this- In the game of the stock market, risk brings reward. Without risk there will be no reward. (in our case, reward means profits). Only certain types of brokers can buy and sell mutual funds for you. I chose not to invest in these on my own. I trade almost daily and enjoy it. Mutual funds are a long-term investment, mostly for your retirement (40, 50, even 60 years from now). I do have money invested in mutual funds, but that is from my parents. Sometime, go up to YOUR parents and ask if they own any mutual funds. There is a good chance they do. They may not know alot about them, but hopefully they are making money in regards to a safer retirement.

On to ETF's, or exchange traded funds. I buy and sell these alot. As for risk goes, they are more risky than mutual funds, but a little less risky than stocks. I would say in the middle somewhere. They are diversified like a mutual fund, but not quite to the extent of hundereds and hundreds of thousands of stocks. They may consist of 60-200 stocks. ETF's usually track the S&P 500 and the NASDAQ. But, the advantage to owning an ETF is that they are less ricky, but in the end give you back some nice profits, AND can be sold through any broker JUST like a stock.. You can buy and sell througout the day with any broker unlike a mutual funds where you have to pay alot more to go through each transaction.

I think that wraps it up, but Pleeaasssee if anything is confusing, anything at all, email me at spncr2@gmail.com. My goal is to help others learn and if all you are doing is getting confused, then I am not doing my job.

Here are a few high points to remember-

• I trade stocks and ETF's on my own. Stocks are VERY risky, ETF's less risky, and Mutual Funds with hardly any risk.
• ETF's and Stocks can be traded through any broker.
• Mutual funds MUST be traded through a larger broker (and more expensive) where they manage your money, not you.
• Selling a stock short means profiting from when the share price drops.
  

Have a great weekend!
All the best,