Stock Market Basics

A basic explaination of the Neopian Stock Market

 

In the past some members have inquired about the stock market.  To help our members I will try to explain some of the terms.  However, ALL STOCK MARKET TRANSACTIONS ARE DONE AT YOUR OWN RISK.  I would advise against withdrawing any nps from your account.  Because the Stock market is extremely uncertain, it is quite likely that you can lose your money. 

 

Stock Market Terms and Definations

• Portfolio-Portfolio is the total shares you have invested in all companies. 
• Stocks-A company can choose to offer a percentage of itself to the general public. This means everyone can invest in this company if they want to. When you want to buy a portion of a company you need to buy a share. A share is the name given to that portion of the company. This doesn't mean you own the company, it just means you have invested in it.  (Direct quote from Neopets)  
• Ticker symbol-A ticker symbol is letter code used to identify a company on the scrolling ticker (located at the top of the page in the stock market).  For example, Lupe Consolidated has the ticker symbol LUPE. 

More definitions will be placed through out the article. 

 

The Basics

 

Above is an example of shares that have been bought, this is only part of a portfolio.  A full portfolio is totaled under all the stock listings.

 

• Today Column-In the above example, Open refers to the price the stock opened the day at.  Current Price is the amount you would get per share if you sold now.  Change is the amount of change from the Open to the Current. 
• Holdings-Qty is the quantity of a particular companies stock you own.  This example portfolio has 500 shares of BOTT and BUZZ   Paid is the amount that you paid to buy the stock. 
• Overall-Mkt Value is the amount that you would be able to sell the stock for now.  In the BOTT column, 3,500 nps if you sold ALL your shares.  % Change is the amount that you profited or lost if you sold now.    In the BOTT column, -53.33%.  Or roughly 4000 nps!   

Now for the rules… 

1. You can not trade more than 1000 shares of stock a day.  I cannot tell you whether it is both buying and selling together.   I know you can’t buy more than 1000 nps in any one day.
2. You can not buy stocks that are trading for under 15 nps.
3. Nigel, the stockbroker, charges 20 nps everytime you sell.  So I suggest that if you want to sell multiple stocks, you sell them all at once and get charged one 20 np fee instead of multiple 20 np fees.
4. When you buy stocks, nps are taken out of your total nps.  Be sure you have the neopoints with you when you decide to buy stocks.  The price you will pay is quantity of stocks you buy x the amount the stock is trading at when you buy.  For example:  I want to buy a stock for 15 nps…I want 500 shares…I will be spending 7500nps.  Do the math so you won’t be surprised. 

My suggestions and how I do it…

            Everyone uses the stock market differently.  Some people invest only in one company and hope very hard that they won’t lose their money.  I choose to try to reduce the risks even if I don’t make as much.  Here’s what I do…

1.      I buy my stocks at 15 only.  Okay…once in awhile 16.  But that is VERY rarely.  The cheaper you buy the stock the better you make out.  Just remember the rules.

2.      I will not sell a stock for a loss.  You are just losing money.  The stock market fluctuates a lot, so usually I just ride it out.  The stocks in the above example have been in my portfolio for over 3 months.  And as you can see, if I sell now I will lose nps…so I will hold on to them for longer.

3.      I set an amount when I will sell my stocks.  Usually around 18 to 20…but it really depends on how much nps I have on hand.  Not every stock will increase.  But finding the good stocks really is a matter of experience.  In the beginning, you will probably hold a lot of red stocks (my own word-stocks that are in the red/sell for a loss).  As you begin to “feel” the market, you may make the decision to keep a stock until it trades for a higher amount.  That is fine.  But for each stock, set your sell point and stick to it.  You may say, I should have held it for longer.  But remember, the stock can go down too and if it does…there goes your profit.

4.      There have been stocks that have gone bankrupt (trading price 00000).  These are very rare but they do happen.  If a stock you own goes bankrupt, you cannot make a profit on it, and at this time, it will never go up again.  Bankrupt means out of business.