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Stocks or Equities
What are Stocks or Equities?
Stocks (or equities) are a security representing partial ownership of a publicly traded company. Purchasing shares makes you a shareholder and gives you a proportional ownership of the corporation.
Shareholders can benefit from selling appreciated shares (capital gains) and from collecting periodic dividend payments.
Dividends are paid out when the firm has cash that is not being reinvested into the company. Some shares receive higher payouts than others.
Learn more about stocks/equities below.
Benefits of Stocks or Equities
Things to consider
When it comes to investing in stocks, you should know that anything can happen and nothing is guaranteed.
From news releases, to a change in management, to projected mergers, there are many factors that can affect the price of a stock. Because of this, you should be comfortable with market volatility and seeing your money potentially increase and decrease over short periods of time.
That’s why it’s important to understand the risks and to have clear goals about what you want to get out of your investments.
Is investing in Stocks or Equities right for me?
Stocks may not be for everyone, but could be a suitable investment, if you:
- Enjoy following business trends, reviewing industry sectors and researching various companies
- Are comfortable with market volatility and seeing your investments potentially hit record-breaking highs and ground-breaking lows in the short term
- Want a more active role in managing your investments
The two types of Stocks
Depending on your needs and circumstances, there are a couple stock types for you to consider.
Discover more about Stocks
Dividends are payments made by companies to a certain class of shareholders who own stocks in those companies.
Dividends are usually paid when a company has excess cash that is not being reinvested into the company.
If a dividend is announced shareholders are notified of the following:
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The Declaration Date, which is the date the dividend is declared
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The Record Date, which is the date all shareholders on record are entitled to the payment
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The Payment Date, which is the day shareholders will receive the dividend payment
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The Ex-Dividend Date, which is the date the stock no longer trades with the dividend
Dividends are often paid on a quarterly basis and the amount received depends on the amount of shares (of a certain class) you own in that company.
For example, if you own 100 shares and are paid out $.50 for every share, you may get $12.50 every quarter or $50 annually.
There are two major types of stock markets:
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Auction market
In an auction market, the prices of exchange-listed stocks are determined by supply and demand. For example, the higher the demand (and lower the supply), the higher the market price. The lower the demand (and higher the supply), the lower the market price.
Individual client orders to buy a stock are relayed to the exchange, where they are posted and matched with an order to sell. The Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) are examples of auction markets.
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Dealer market
In a dealer market when you trade stocks, you are buying from or selling to a dealer that trades with a network of other dealers.
These are negotiated markets where the bid and ask quotations are entered by the dealers acting as 'market makers' in a particular security. The Canadian Dealing Network and OTCQB in the U.S. are dealer markets (which are sometimes referred to as ‘over-the-counter’ markets).
Market Order
A market order is an order to immediately buy or sell a security at the best bid or ask price available on the market.
Market orders may provide an opportunity to have an order filled but gives you less control over the purchase or sale price.
There are two types of market orders:
A stop loss order is an order that becomes a market order when the stock trades at, or through, the stop price. The stop price can be thought of as a trigger.
A stop buy order is the opposite, which is effective when the price reaches or exceeds the stop “trigger”.
Limit Order
With a limit order, you set the maximum price you are willing to pay for a stock as a buyer or the minimum price you are willing to accept as a seller. The buy or sell transaction will not be filled unless the “limit” price is met.
Limit orders are valid for the following durations; Day, GTC (Good ‘til Cancelled), GTD (Good ‘til date MMDD), Day+Ext (both regular and extended market sessions for that day).
A day order, which is an order valid only for the day it is entered on.
An open order remains valid at a specific price until the order is executed or cancelled. 180 and 90 calendar days for U.S and Canada, respectively.
Stocks pricing: clear and simple
It's the service, support, and overall experience of investing with us that defines the value for you.
Start investing in Stocks or Equities with TD Direct Investing
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1
Open an account
Select the TD Direct Investing account you want to open online or book an appointment.
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2
Fund your account
Transfer funds into your account with the online bill payment or funds transfer feature – or set up recurring deposits. Moving investments from another brokerage? Ask about how we could cover the transfer fees up to $150.1
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3
Start investing toward your goals
Build your portfolio using ETFs, stocks, options, mutual funds, GICs and more.
Explore other investment types
Open an account online – it's fast and easy
Whether you're new to self-directed investing or an experienced trader, we welcome you.
