What Is A Stock Market Account?

Just about everyone has a checking account at their bank.  You have to open a checking account before you can make deposits, write checks and earn interest.

Similarly, you have to open a stock market account before you can make deposits, buy stocks and get dividends.  So you can think of your stock market account as your checking account for stocks.

Except instead of just having cash in it, it has cash and stocks and other investments in it that you own.  And just like you can look at your checking account online and see all your deposits, withdrawals and balance, you can look at you stock market account.

The top part of the screen will look something like this.

Balance ($) on the Cash Balance line shows that you have $5700 in cash in your account.  You can use this to buy other stocks if you want.

Today’s Net Change on the cash balance line is $0.  That means you did not buy any stocks today, you did not make any deposits, and you did not receive any dividends from your stocks.

Balance ($) on the Long Stock Value line shows that you own stocks in your account that are valued at $4300 at this moment.  Remember the word long just means you own these shares (see What Does Long And Short Mean).

And Today’s Net Change on the Long Stock Value line shows that the value of your stocks and your account went up by $85 today, even though you didn’t do anything — not bad.

So the Balance ($) on the Account Value line shows your total account is $10,000 right now.  This would be like your checking account balance.

And Today’s Net Change on the Account Value line shows that in total, with all your stocks and transactions today, your account went up by $85.

Now lets look at the bottom section.  This tells you how each one of the stocks you own is doing.  We’ll just look at the first line because it’s the same thing for all of them.

Symbol.  You remember this, right? Every stock has a unique abbreviation.  So that’s what this is.  The abbreviation for the stock you own.  In this case it is Sprint, the telephone company.

Description spells out the name of the stock symbol so you don’t have to remember them, so in this case it says Sprint.

Qty is the quantity, or number of shares you own of this stock.  You own 100 shares of Sprint stock.

Purchase Price is how much you paid for each share of Sprint stock when you bought them.  You bought your Sprint stock for $5 a share.

Cost is the total amount you paid to buy all of those Sprint shares.  Since you bought 100 shares at $5 a share, your cost was $500.

Market Value is how much all those 100 shares are worth right now.  So even though you only paid $500 for them, you could sell them right now for $600.  Nice.  This is why we invest.

Gain($) is how much money you have made on your Sprint stock since you first bought it if you sold it right now.  Since your cost was $500 and you could sell it for $600, you have gained $100 dollars.  This is your profit.  Not bad.

Day Gain($) shows how your Sprint stock did today in the stock market.  Your total Sprint value went down $10 today.  Well, okay, stocks go up and stocks go down day by day.

Tomorrow, your Sprint shares may be up $20 – or down another $5 or $10.  But in total right now you are still $100 ahead in your Sprint stock, so things are okay.

And if you follow the guidelines in this book, you will improve your odds that your gains will be greater than your losses over time.

So that’s what your stock market account is, and what it will look like.  Every day the values will change based on the stock market.

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