My research and experimentation on stock trading continues. My notes says...
Trading in a stock market like the Philippine Stock Exchange (PSE) means you buy and sell shares of stock of companies listed there. You can do this either through a stock broker or by yourself online. To earn from this trade, you have to know when to get in (buy) and when to get out (sell).
Of course, the stock market provides you some basic information. This include the bid price, ask price, volume and value of all trades for the day. The bid price is the price that buyers are willing to pay for the stock. The ask price is the price that sellers are willing to accept as payment for the stock. The volume and value of stocks traded are also available.
The bid and the ask price is never the same. The ask price is always higher than the bid price. The difference between the two is called the bid/ask spread. I read something about the spread going to the brokers, but newbie as i am, am not exactly sure. For now, it is enough that we are aware that there are bid and ask prices.
Now, I understand that in order to buy a stock, you may order it using the bid price (in that case you get queued with everyone bidding), or you can use the ask price (buying it instantly from those who have expressed willingness to do so. Once you've bought the stock, you then watch if the price of the stock will go up or go down.
In monitoring, you have to take note of the opening, high, low and closing prices. The opening price is the price at which the stock was being traded upon opening of the stock market. Take note that the PSE opens at 9:30 am and closes at 12:00 noon. The closing price is the price at which the stock was trading upon closing.
The high and low prices on the other hand are the highest and lowest prices at which the stock was traded during the day. All these, together with the volume and value of the trade, provide you clues on when to buy and sell a certain stock. To know more, visit Investopedia.com's Stocks Basics.