You might work for a large, publicly traded company where you can buy stock in that company.  They might even give you stock as a bonus, or as a part of your pay.  This is probably the case if you work at a place like Wal-Mart, Nike, or many others.  This of course won’t include most people, as 80% of people are employed by small businesses. In addition to this, however, there are many companies that will sell you stock in their companies directly. General Electric (GE), Home Depot (HD) and many others will let you take part in these direct stock purchase programs.

The Traditional Route: A Stock Broker

You know, the old guy that has an office down on Main Street.  Stock Brokers buy stock on behalf of clients, often times giving advice along the way. I know, I’ve heard the joke as well: Why is the guy who gives you financial advice called a stock ‘broker’. Good question.

Online Stock Brokers

Take the idea of the stock broker, but give him a webpage and now you have an online stock broker.  Something like that, at least. When you open an account with an online brokerage in this way, you are given what is called a trading platform. Basically this is a computer software where you are able to login, see charts and graphs of all the different stocks you could imagine, and place trades, deciding on the spot what you want to buy and what you want to sell.  Buy stock from the comfort of your own home? I know. A novel idea.  I worked for a period of time for an online broker. In a sense it was like a regular broker, only that we didn’t give trading advice of any kind, we basically helped people to set up trading accounts so they could get going on their own.  It is a very simple thing to do. The hard part? Know which stocks to buy!

Position Trader

Some do it for the long-term benefits, hoping to be able to retire well and live a comfortable life.  This approach is not bad at all.  Even though the stock market has seen its fair share of crashes; the crash in the 1920’s, again in the 1980’s and most recently towards the end of 2008, stocks have always been a great investment, making fantastic overall gains over this period of time. These people, who buy stock for months, and even years or decades, are known as position trader, or long term investors.

Swing Trader

The swing trader is much shorter term, although at times not by much. A swing trader can buy and hold a stock for a week, a few weeks or even around the month mark. This is a good, and common way to trade for those who are in it for the thrill, but don’t want to buy and sell anymore than that.

Day Trader

Lastly there are day traders. These traders are in it for the thrill, but at the same time will take it very serious, just like any business, because for some their entire livelihood rests on their ability to be able to take more out of the market than gets taken from them. Day traders have to be quick when they buy stock, and will often leave positions open for an entire day, but can close them as quick as within a few seconds of having opened them, depending on the volatility of the market.