Stock Trading



1. Stock trading must take place on the exchange floor.

False
Trading can be executed on the exchange floor. It can also be completed electronically. There is a push to move this process to the networks and off the exchange floors. Most markets such as the NASDAQ have online stock trading. This makes it more convenient and efficient for everyone involved including investors, brokers, and companies. Saving time and money is very important in the markets. This will allow more time and money to be put into the market to raise prices.


2. Most of the public does online stock trading with preferred stock.

False
Common stock represents the majority of the transactions that are completed by the public. This type offers voting rights and the right to share in dividends. Preferred trading within the markets pays consistent dividends and has first call on dividends over common stock. For someone just starting out, it is important to know the difference between these choices. Knowledge of the markets will provide a much great opportunity to be successful. Online resources, expert advice, and financial news shows can be very helpful in teaching an individual about the ways of the market.


3. Stock trading is affected by supply and demand.

True
If there are more sellers than buyers, online stock trading will be less expensive. If there are more buyers than sellers, then it will be more expensive. Other events such as natural disasters can affect the whole market.


4. Both the buyer and seller set the stock trading prices.

True
In online stock trading, the buyer states what price they will pay. This price is refered to as the bid price. The seller also has a price called the ask price. This difference is called “the spread” and it is kept as profit by the broker.


5. It is wise to seek counsel when performing financial transactions of this magnitude.

True
Proverbs 12:15 - The way of a fool is right in his own eyes: but he that hearkeneth unto counsel is wise.


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