Buy and Sell Stock

Buying and Selling stocks is a traditional method of investment. Risk capital money or the money that is excess after paying all the bills and does not effect your lifestyle can be used to trade stocks.

Buying Stocks is similar to owning a company without having to work for it. Companies raise money by issuing public offerings to general public. Investors can choose to buy a unit also known as a stock for a current price set by the underwriters.

Companies use your investment for the growth and issue you the share of the profits. Those profits can be in terms of the rise in the value of the stock or paying dividends. The growth of a Stock is measured over a period of time and is said to be performing well if the value of a stock is increased compared to the initial publc offering. A Stock is said to be under performing when its value is consistently falling below the initial value.

Stocks are an attractive form of investment compared to real estate because they can be easily liquidated. People prefer to invest in stocks due to the promising return of investments compared to the savings accounts.

One major disadvantage of Buying and Selling Stocks is that they are unpredictable and are depending up on many factors that can go out of control. Changes in company policies, reputation of the company, government policy changes, social media propogation, natural disasters, and so on. Many stock investors are constantly checking their portfolio for losses or gains.

Trading stocks is monitored and controlled by several government regulations, markets, traders, tax rules, and so on. Many agents in the Wall Street in New York decide how the profits need to be shared or where the funds need to be invested.

Stocks are different types such as the growth stocks, Technology stocks, Common stock, Preferred stock, and so on.

A stock can be bullish, that is rising and optimistic or bearish that is falling and not profitable. Some investors do take advantage of the falling prices and buy those stocks as well.

Active traders have made Buy and Sell Stock as a full time job and end up being profitable. The main resources being the money, the Internet, phone, and time.

Buy and Sell Stocks is done through the different exchanges. The major exchanges prominent in the USA for stock trading include:

1. New York Stock Exchange (NYSE): All auctions happen at a physical location and done by brokers. Suitable for well established large companies with high number of share holders and stocks.
2. National Association of Securities Dealers Automated Quotation System (NASDAQ): Dealers trade stocks through the Internet or phone. Suitable for smaller companies that do not qualify for NYSE and trade most of the technlogy stocks.

All earnings/losses from Buy and Sell Stock must be reported on tax returns. Any dividends paid or capital gains are taxed based on how they are classified.

• Brokers issue Form 1099-B in January.
• Investors use Form 8949 while filing the taxes.
• Long term capital gains are profits from Buy and Sell Stocks that are held over an year and are charged 15 percent.
• Short term capital gains are profits from Buy and Sell Stocks that are held less than a year and are considered as regular income.
• Dividends that the companies issue during the year are charged as normal income.
• Losses from Stocks can be deducted from your income for upto $3000 if married couples filing jointly and upto $1500 if filing seperately.
• Capital gains losses can only be deducted if the respective stocks are sold in that year and are not continued in to the next year.

• Do not put all cash at once and in a single type of market or stock
• Cash the profits before they turn in to losses
• Follow the industry experts such as Warren Buffet and events that trigger market changes.
• Keep a track of the different brokerage accounts and the transfers to and from your regular bank accounts.

• Cryptocurreny exchanges do not generally issue a 1099. You are on your own to keep a track of the transfers, gains, and losses.
• Note that Forex trading and Over-the-Counter Markets have different rules and tax implications.
• Create a broad portfolio with diverse stocks in different industry sectors.
• Observe the end of the day, weekend, year-end, quarter-end, and financial year-end trends in the markets.
• Notice the market changes due the local, national, and international events around you.
• Start with smaller amounts and be prepared for losses in the initial days. Keep losses to under eight percent as a general rule.
• It is suggested to buy high priced stocks and observe them over a longer period of time.
• Stocks tend to rally to higher price than the original value after a period of decline.