A brokerage firm is a company that is licensed to buy and sell stocks. Brokerages provide you with a connection to the stock market and charge a commission when you make a stock trade. Some brokerages charge you just to have a brokerage account. A broker is a stock salesperson.
Don’t wait until you can afford whole shares. Fractional shares make it easy to start with only a few dollars.
You’ve heard the saying, “Buy low, sell high,” right? People on Wall Street would love to be able to say, “I’ll buy this stock today because it’s going up tomorrow.” Unfortunately, that crystal ball doesn’t exist. No one can time the market, so don’t bother trying!
It is when a company first sells its stock to the general public.
In an IPO, a stock begins trading on a stock exchange like the NYSE or Nasdaq.
When a company is young, its owners are usually a small group of people that have a connection to the company (founders, employees, and investors). The company’s stock is “privately held.” Most companies stay that way, but some grow to the point where they sell shares in the company to the general public. This is called an IPO, or initial public offering.
After the IPO, shares get traded (bought and sold) directly between investors on the stock market.
The stock market is where stocks are traded.
Stock isn’t sold at a fixed price. The stock market is a giant auction with prices constantly changing due to supply and demand.
When you buy stock on the stock market, you aren’t buying it from the company – you’re buying it from an existing shareholder. Likewise, when you sell your shares, you’re not selling them back to the company – you’re selling them to some other investor.