How do you lose money from a stock you invested in the stock market? and Toadstool stock

How do you lose money from a stock you invested in the stock market?

How do you know how much you will lose? For example if I buy a stock for one dollar, is it possible that I will have to owe money if the value of that stock decreases? How does one make or lose money from buying a stock? I want to know to understand all the risks involved.


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Answer by John
People buy and sell stocks to make money. If you buy a stock for 1 dollar, the value of that stock can go up or down, depending on how well the business is doing and some other factors. If the value goes up to say, $ 1.50, then you can immediately sell that stock for a profit of 50 cents! Or you can wait and hope it goes higher.. and then sell it for more if it goes up. However if it drops to 75 cents, you may want to sell it immediately before it drops any lower.. but you lose 25 cents. But possibly save more money if it crashed.. then you'd lose all the 1 dollar you invested! (oh no!) The whole point of stock investing is to buy low, and sell high (or higher than you bought it for) to make a profit. (It sounds easier than it is, and there's a lot of gamble involved. Don't start investing in the stock market unless you can afford to lose a few thousand.)

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