FAQS
Djellala Frequently Swing Trading Asked Questions and Answers
What is a stock?
A stock is a symbol of a company traded in an exchange. Each company is given a symbol to identify it. Facebook Inc symbol for example is FB. If you want to know any company symbol just google it.
What is trading stocks?
Trading stocks is a business activity of traders who buy and sell stocks ( shares of of a given company).
Where can I buy shares of a given company?
In order to buy any company shares, you should open an account at a brokerage firm.
What is a brokerage firm?
A brokerage firm is a company that lets you buy stocks/shares from the exchange. So its role is to help you own shares of a company after paying a commission.
Why do people trade stocks?
People trade stocks to make money. Let say you buy 100 shares of Facebook Inc at $100 a share. If Facebook stock goes up to $110. So you will make $10 for each share you bought. So your profit is $1000 (100 shares x $10 )= $1000 profits.
What is a brokerage firm?
A brokerage firm is a company that lets you buy stocks/shares from the exchange. So its role is to help you own shares of a company after paying a commission.
What is a commission?
A commission is the amount of money that you always pay when you buy or sell your stock/shares.Your broker will cut this commission automatically when buy or sell.
What else a broker can cut from my account?
A broker can cut other fees than a commission. For example if you have a margin account he will charge you interest rate on this borrowed money.
How many kinds of accounts exist?
Mainly there are two major accounts. One is called cash account. The second one is called margin account.
What is a cash account?
A cash account is simply your money that you put into your account. Let say you open an account then transfer $5000 to your account. This money is yours. So they call it cash account?
What is a margin account?
We said before that a cash account is your money only. let say it is $5000. Now if you need more money, you can ask your broker to lend you money. In general he will double your money. So your margin account would be $10,000. $5000 is your own money, the other $5000 is your broker money. You can use it, but you need to pay interest rate for that broker's money.
Why traders use margin account?
There are two major reasons. First is to double your money in order to buy more stocks. The second reason is to be able to sell short stocks.
What is selling short?
To understand what is selling short, lets explain what does it mean to go long. Going long is to buy a stock thinking that this stock will go up in the future. On the contrary, selling short is when you think the stock will go down. So you sell the stocks that your broker lend you. Then when the stock goes down and you are right. You buy them back. Therefore you make a profit on the down side
How to apply for a broker?
First you should compare brokers and see which one has the best and cheapest commissions and fees. Check this link on how to select the best broker .
Is trading stocks like gambling?
No, trading stocks is a well known business activity. Professional traders make money. Beginners gamble.
How to be professional trader?
To be a professional trader you need to learn how to trade. This process can take from one year to 3 years. You need to have money to trade well. You need discipline and patience.
Where can I learn how to trade stocks?
We teach you how to swing trade stocks to make money. Please check the link for more information about our training.
Is trading stocks risky?
Trading is inherently risky business and while stop loss orders can help you manage your risk, they are not foolproof.
If I take your training, can I be a professional trader?
To be a professional trader depends on you. To make it easier for you to understand. Let us ask this question. Are all the students in the same classroom succeed to be PHDs? you will say:"Noway all the students will be PHds." we will ask:"Why" You will say:"Each student is different. Some students work harder than others. So the best ones succeed, other no." We think that you answered your question by yourself.
Is there a way not to lose any money in any trade?
No. Any money you put in the market, you are risking it.
Is there a way to minimize the risk in trading stocks?
Yes of course. You can use a stop loss. Another way is to divide your account into many positions to reduce the risk.
What is a stop loss?
A stop loss is an order that you put after you buy a stock where you want to exit the trade and sell at a given price. Let us give you an example. You bought 100 shares of facebook Inc symbol FB at $100. Then you put a stop loss order to exit the trade at $99. Now if the stock goes down to $99 you sell facebook shares. Your loss is $100.
What if I dont use a stop loss. What will happen?
If you dont use a stop loss, your loss can be big. Let say we take the example above. After buying facebook at $100. You think that facebook will go up, unfortunately facebook goes down to $99 the next day. sicne you did not put a stop loss, you still think that facebook will go back to $100. Unfortunately, facebook after few days goes down to $90. So your loss is $1000. So $1000 is a big loss. If you continue having big losses, your account will be wiped out. Thats why professional traders use stop loss when they are wrong in the direction of the stock. Beginners are not disciplined thats why they are always losers.
