Different Types of Stocks | Desjardins Online Brokerage (2024)

All trading basics

There are two main types of stocks: common stock and preferred stock.

Common Stock

Common stock is, well, common. When people talk about stocks in general they are most likely referring to this type. In fact, the majority of stock issued is in this form. We basically went over features of common stock in the last section. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.

Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders, and preferred shareholders are paid.

Preferred Stock

Preferred stock represents some degree of ownership in a company but usually doesn't come with the same voting rights. (This may vary depending on the company.) With preferred shares investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation preferred shareholders are paid off before the common shareholder (but still after debt holders). Preferred stock may also be callable, meaning that the company has the option to purchase the shares from shareholders at anytime for any reason (usually for a premium).

Some people consider preferred stock to be more like debt than equity. A good way to think of these kinds of shares is to see them as being in between bonds and common shares. (If you don't understand bonds make sure also to check out our bond tutorial.)

Different Classes of Stock

Common and preferred are the two main forms of stock; however, it's also possible for companies to customize different classes of stock in any way they want. The most common reason for this is the company wanting the voting power to remain with a certain group; hence, different classes of shares are given different voting rights. For example, one class of shares would be held by a select group who are given ten votes per share while a second class would be issued to the majority of investors who are given one vote per share.

When there is more than one class of stock, the classes are traditionally designated as Class A and Class B. Berkshire Hathaway (ticker: BRK), the company of Warren Buffett (one of the greatest investors of all time), has two classes of stock. The different forms are represented by placing the letter behind the ticker symbol in a form like this: "BRKa, BRKb" or "BRK.A, BRK.B".

Different Types of Stocks | Desjardins Online Brokerage (2024)

FAQs

Different Types of Stocks | Desjardins Online Brokerage? ›

Thus, irrespective of the traded value, the brokerage that you have to pay remains the same. However, this is subject to a condition that if the percentage brokerage is less than the lower amount is charged to the investor.

What are the 4 types of stocks to trade? ›

Here's what you should know about the different types of stocks.
  • Common stock. Common stock is probably what you think of when you are looking to invest in stocks. ...
  • Preferred stock. Preferred stock is more like a bond than it is a stock. ...
  • Large-cap stock. ...
  • Mid-cap stock. ...
  • Small-cap stock. ...
  • Growth stock. ...
  • Value stock. ...
  • Foreign stock.
May 16, 2024

What brokerage should I use for stocks? ›

Best brokerage accounts for online trading compared 2024
BrokerBest forPromotion
Fidelity InvestmentsOverall tradingGet $100 when you open a new account with $50 or more.
Axos Self-Directed TradingMutual-fund investorsN/A
E-TradeMobile appN/A
Charles SchwabLong-term investingN/A
10 more rows

Is brokerage different for different stocks? ›

Thus, irrespective of the traded value, the brokerage that you have to pay remains the same. However, this is subject to a condition that if the percentage brokerage is less than the lower amount is charged to the investor.

What are the 4 main types of orders in stock market? ›

The most common types of orders are market orders, limit orders, and stop-loss orders. A market order is an order to buy or sell a security immediately. This type of order guarantees that the order will be executed, but does not guarantee the execution price.

Which type of trading is best for beginners? ›

Overview: Swing trading is an excellent starting point for beginners. It strikes a balance between the fast-paced day trading and long-term investing.

What are the three main types of stock? ›

Types of stock
  • Common stock. ...
  • Preferred stock. ...
  • Large-cap stocks, mid-cap stocks and small-cap stocks. ...
  • Domestic and international stocks. ...
  • Growth and value stocks.
Mar 15, 2024

What brokerage do most millionaires use? ›

Best Brokers for High Net Worth Individuals
  • Charles Schwab - Best for high net worth investors.
  • Merrill Edge - Best rewards program.
  • Fidelity - Best overall online broker.
  • Interactive Brokers - Great overall, best for professionals.
  • E*TRADE - Best web-based platform.
Mar 28, 2024

Which stock brokerage is best? ›

Stock Brokers
  • Groww (3.1) Full Details. Discount Broker. ...
  • Zerodha (3.8) Full Details. Discount Broker. ...
  • Angel One (3.2) Full Details. Full Service Broker. ...
  • Upstox (3.4) Full Details. ...
  • ICICI Direct (3) Full Details. ...
  • HDFC Securities (3.1) Full Details. ...
  • Kotak Securities (3.1) Full Details. ...
  • Motilal Oswal (3.8) Full Details.

Which broker do most traders use? ›

Best brokers for day trading
  • Interactive Brokers.
  • E*TRADE from Morgan Stanley.
  • Fidelity.
  • Webull.
  • Robinhood.
  • TradeStation.

Which brokerage has the lowest fees? ›

Examples of brokers with Lowest brokerage charges in India include Zerodha, Angel One & Kotak Securities . These platforms often appeal to traders and investors seeking cost-effective options with transparent fee structures, providing a variety of financial instruments at competitive rates.

Does it matter which brokerage you use? ›

Each brokerage is different, and choosing the right brokerage for you is just as important as the decision to start investing, because fees and trading costs can potentially eat into your returns substantially. Many online brokerages offer commission-free trading, but some brokerages can charge high fees.

Should I use a stock broker or do it myself? ›

Do you need a broker? The short answer is no—you don't need a living, advice-giving, fee-charging broker (although you shouldn't rule them out). You do, however, need a brokerage—the online storefront where you purchase stocks, bonds, exchange-traded funds (ETFs), and other investments.

How to buy stocks for beginners? ›

  1. 8-Step Guide to Investing in Stocks.
  2. Step 1: Set Clear Investment Goals.
  3. Step 2: Determine How Much You Can Afford To Invest.
  4. Step 3: Determine Your Tolerance for Risk.
  5. Step 4: Determine Your Investing Style.
  6. Choose an Investment Account.
  7. Step 6: Fund Your Stock Account.
  8. Step 7: Pick Your Stocks.
May 20, 2024

Is it legal to buy and sell the same stock repeatedly? ›

Just as how long you have to wait to sell a stock after buying it, there is no legal limit on the number of times you can buy and sell the same stock in one day. Again, though, your broker may impose restrictions based on your account type, available capital, and regulatory rules regarding 'Pattern Day Traders'.

How to sell stock immediately? ›

KEVIN: A market order is your go-to when you want to get out of a trade as quickly as possible during standard market hours. Generally, they execute immediately, but remember, the trade-off here is price. You will receive the current price, which could be different from the last bid you saw.

What are the 4 types of basic stock? ›

White stock (Fond Blanc), 2. Brown stock (Fond Brun), 3. Vegetable or neutral stock (Fond Maigre) and 4. Fish Stock (Fume de Poisson).

What are the four trading styles? ›

What is a trading style?
Trading styleTimeframeCommon holding period
1. Position tradingLong termMonths to years
2. Swing tradingShort to medium termDays to weeks
3. Day tradingShort termIntraday only
4. Scalp tradingVery short termSeconds to minutes

What are the 4 levels of stock? ›

The 4 Stages of the Stock Market Cycle – And What Drives Them
  • Accumulation (Early Cycle) Accumulation is considered the first stage in the cycle, as it occurs immediately after the market has reached the “rock bottom” of a downturn. ...
  • Markup (Mid Cycle) ...
  • Distribution (Late Cycle) ...
  • Markdown (Decline)
Mar 19, 2024

Top Articles
Latest Posts
Article information

Author: Horacio Brakus JD

Last Updated:

Views: 6363

Rating: 4 / 5 (71 voted)

Reviews: 86% of readers found this page helpful

Author information

Name: Horacio Brakus JD

Birthday: 1999-08-21

Address: Apt. 524 43384 Minnie Prairie, South Edda, MA 62804

Phone: +5931039998219

Job: Sales Strategist

Hobby: Sculling, Kitesurfing, Orienteering, Painting, Computer programming, Creative writing, Scuba diving

Introduction: My name is Horacio Brakus JD, I am a lively, splendid, jolly, vivacious, vast, cheerful, agreeable person who loves writing and wants to share my knowledge and understanding with you.