Common Stock

Common stock is a type of stock that represents the holder's ownership of a portion of a company and the right to vote at the company's shareholder meetings. Holders of common stock typically receive dividend income from the company and may also enjoy capital gains from increases in the company's value.

The main difference between common stock and preferred stock is that when the company goes bankrupt or liquidates, common stock holders can only receive the remaining assets after preferred stock holders and creditors, so the risk is higher. On the other hand, holders of common stock may also receive higher returns when the company makes profits.

If you want to invest in common stocks, here are a few steps you need to know:

Step 1: Choose the right brokerage firm

A brokerage is an institution that provides stock trading services. You need to open a securities account with a brokerage and deposit sufficient funds before you can trade. When choosing a brokerage firm, you need to consider the following factors:

Brokerage reputation and service quality

Brokerage transaction fees and commissions

Brokerage trading platforms and tools

Brokerage investment products and market scope

You can check the reviews and comparisons of different brokers on the Internet, or ask experienced investors for advice to find the broker that suits you.

Step 2: Analyze and Select Common Stocks

After you open an account and deposit funds, you can begin selecting the common stocks in which you would like to invest. In this process, you need to do the following two types of analysis:

Fundamental analysis: Fundamental analysis refers to the evaluation of a company's financial status, operating performance, industry prospects, competitive advantages and other factors to determine the company's intrinsic value and growth potential. Fundamental analysis can help you find undervalued or overvalued stocks and avoid investing in poor or loss-making companies.

Technical analysis: Technical analysis refers to using charts, indicators, trends and other tools to analyze stock price trends and market sentiment to predict future price changes. Technical analysis can help you determine the right time to buy and sell, and control risk and profit.

You can choose the analysis method and strategy that suits you based on your investment objectives, risk tolerance, time window and other factors, or combine the two analyzes to make decisions.

Step 3: Place the order and execute the transaction

After selecting the common stocks you want to invest in, you can place an order on the broker's trading platform. When placing an order, you need to specify the following elements:

Stock code: Each stock has a unique code that is used to identify and trade it.

Transaction type: You can choose to buy or sell stocks.

Transaction quantity: You can specify the number of shares you want to buy or sell, usually in units of one sheet (100 shares).

Transaction price: You can specify the price of the stock you want to buy or sell, or choose to trade at the market price.

Transaction validity period: You can specify how long your order is valid, or choose to valid or cancel it on the same day.

After placing an order, you need to wait for your order to be filled, that is, someone is willing to buy or sell the stock at the price you specified. You can check your order status and transaction records on the trading platform, and modify or cancel your order at any time.

Step 4: Monitor and adjust your portfolio

After completing the transaction, you become a holder of common stock. You can enjoy the company's dividend income and capital gains, but also bear market risks and fluctuations. Therefore, you need to regularly monitor and adjust your investment portfolio to ensure that it meets your investment objectives and risk appetite.

When monitoring your portfolio, you need to pay attention to the following areas:

Individual stock performance: You need to track the price changes, profitability, competitive advantages and other factors of each stock you hold, and compare their performance with other stocks in the same industry or market.

Portfolio performance: You need to calculate your portfolio's total return, risk level, diversification and other indicators, and compare them with your expected target and benchmark index performance.

Market dynamics: You need to pay attention to various factors that affect stock market trends, such as economic data, policy changes, industry trends, market sentiment, etc., and judge their possible impact on your investment portfolio.

When adjusting your investment portfolio, you need to make the following decisions based on your monitoring results and market changes:

Add to or reduce your position: If you are more bullish or bearish on a stock's prospects, you can decide to increase or decrease the amount you hold in that stock to increase or decrease its weight in the portfolio.