You don't have to be a high powered financial executive to deal in stocks
By: ANDREW REGAN
The world of stock broking is generally seen as the realm of financial gurus and is not usually considered something that ordinary people might do in their day to day lives. However, many people deal in risky investments on the stock market, either directly or through a stock broker. A stock broker is a person or a company who sells stocks - i.e. the capital raised by a corporation through the issuance and distribution of shares - on behalf of another person or company.
Generally speaking, there are 3 types of attitudes to investment: low-risk, medium-risk and high risk. Low-risk investors usually seek to garner better returns than they might gain from a bank or building society account. Medium-risk investors generally look for higher spending power and are more likely to place a greater proportion of their money on the stock market than low-risk investors. High-risk investors, however, are mostly interested in high total returns and therefore account for the greatest proportion of money ploughed into the stock market.
While understanding the risks of investing in the stock market is crucial if you're thinking about dealing in stocks, it is also important to understand the products and terminology related to the stock market. Covered warrants, for instance, are the right to buy or sell an investment or a basket of investments at a given price; here, your loss is limited to your initial investments. The London Stock Exchange offers guides on Covered Warrants in order that people seeking to deal in stocks can better equip themselves with knowledge before they launch into the stock market.
CDFs are a product that will allow you to trade on equity, index, foreign exchange and commodities market movement at the price of a relatively small initial investment. This sort of trading is known as margin trading and can give investors huge leverage on investment; but it also carries high associated risks. Your loss, for example, is not limited to your initial deposit, unlike the case with Covered Warrants. Additionally, Listed CDFs allow you to control your position in a wide range of underlying assets with built-in Stop-Loss; here, investors can never lose more than the amount of their initial investment. Listed CDFs are also traded freely on exchanges rather than through issuers.
You might be interested to know that there are many stock brokers that have become famous icons in popular culture; for instance, silent film actor George Murphy once worked as a Wall Street Runner and American lifestyle-guru Martha Stewart worked as a stock broker for nearly 8 years before setting up her vast business empire. But despite the glamour that the stock market might seem to exude, it is crucial to equip yourself with knowledge if you want to invest. Many leading financial institutions offer educational advice and services on stock broking; and if you're thinking of dealing in investments, it's always best to see what the experts have to say before you jump in at the deep end.
About the author:
Andrew Regan is an online journalist who enjoys socialising at his local rugby and cricket clubs.
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