How could you lose money from buying stocks?
When you buy a stock you can both lose and gain money. You can make a loss if the value of the stock that you own goes down and you decide to sell – the loss will be the difference in the price that you bought the stock for, any associated costs, and the price that you sold it for. In the event that your investment’s value goes to zero, you would lose all of your invested money. For example, imagine you make an investment of $100 by buying 10 shares of Company X’s stock at $10 per share. Then Company X’s share value drops to $0 because they cannot pay their debts and they default. In this scenario you would lose your $100 investment. There are other risks such as foreign exchange fluctuation involved too – please see here for more details.
Introduction to stock trading
- What is a stock?
- Where do stocks come from?
- What is stock ownership?
- Why do people buy stocks?
- How could you lose money from buying stocks?
- What are stock markets?
- What is a stock broker?
- What is a stock price?
- What is a bid-offer spread?
- What are stock charts?
- What is commission?
- What are bullish vs bearish markets?
- What is technical analysis?
- What is fundamental analysis?
- What are analyst recommendations?
- What are stock financials?
- What is EPS (earnings per share)?
- What is a P/E ratio (Price-to-Earnings)?
- What is a P/CF ratio (Price-to-Cashflow)?
- What is ROE (Return on Equity)?
- What is Market Sentiment?
- What are Market Sentiment Indicators?
- What is the VIX?
- How does News and Social Media impact stocks?