As a Trader or Daytrader you need to know the differences between the different Products that can be traded with your Broker. Everything has advantages and disadvantages in general and not every Trader is the same. My Broker offers a lot of Products that can be traded, which include Stocks, ETFs, Futures, Options, Forex and CFDs. What are Stocks? Stocks are Shares of a Company. With every Stock you buy, you buy a Piece of a Company, no matter if you buy 100.000 Shares or just 1. But what does that exactly mean? Why do Companies go Public and start to sell Shares? The main reason is to raise capital. Companies sell their Shares for the IPO Price and receive a lot of Money. The biggest Advantage is , that they never have to pay it back. If somebody or a Company is taking out a loan from a Bank, they will have to pay it back plus additional Interest. A Company which is traded public sold their Shares and they don’t have to buy them back. They’ve got the Money from the Investor. If the Stock Price falls, it is theoretically not their Problem. I say theoretically, because of[…]
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