The Ouachita telegraph. [volume] (Monroe, La.) 1865-1889, 1881-01-28
STOCK GAMBLING ON WALL STREET.
Lucid Explanation of the Business.

Lucid Explanation of the Business.
The details of Wall street operating
are mystery to those who have not
taken q hand. The person who wants
10 speculate does not know where to
begin or how to take the first step.
How much money must he put up as
a margin? {? What does his broker do,
and how much must the broker be paid
for making the purchases? These are
constantly recurring questions. Dozens
of letters are sent to New York news
papers on the subject, and the writer's
seem to imagine that there is some
thing very mysterious about the whole
business. AS matter of fact, the re-
than "a purchase for rise. Selling
stocks short is just trifle complicated
to novice. but is easy to understand.
The beginner usually starts his
speculative career by purchasing 100
shares of stock, although a less number
may be bought. He seeks trust
worthy broker, and is told that, to
purchass 16O shares, he must deposit
with the broker eight or ten per cent,
ofth par value of the stock. Dealings
in the New York Exchange are so
scaled that ten per cent, means 81 900,
land most brokers require this sum
from strangers. This deposit is called
the margin. The broker then opens an
account with him by placing 81 900 to
the credit of the customer. The next
step is for the customer to select stock
which is likely to advance, and having
made up his mind that Erie, for in
stance, is the card, he simply says to
the broker, ssBuy me 100 shares of
Erie" Off goes the broker like shot
to the Stock Exchange, where he dives
into crowd of 1000 other brokers'.
The floor of the great room has upon it
a score or more of knots of men, push
ing, surging, and yelling at the top of
their lungs. One knot is the st. Paul
clique, another the Reading clique,
third the Erie crowd. Our broker
rushes into the Erie coterie, elbows
men out of the way, holds his right
hand high in air, and, knowing that
the one man about whom the crowd is
surging has some Erie stock to sell, and
hearing dozen other men, with their
bands in the air, yelling "395," he
jumps up in the air higher than ali the
others and yells "4O." Thereupon the
centre of the group makes rush at
him and shouts. 'sSold." ALI this
means that our broker has offered to
pay $40 share for 100 shares of Erie,
and the other man has sold it TO him,
the other brokers having Did only
$39,S74 for it. The two brokers jot
down the transaction in their memoran-
dunn books, and the broker who sold il
reports the sale. Instantly is flashed
over The wire and into every brok er's
Office in the city the new quotation for
Erie of 40. The broker who sold rolls
up 1000 share certificates of Erie and
sends them to our broker, who puts
them in his safe and sends back check
for 81 900, the price of the stock.
Our new customer than "holds 100
Erie" He may "hold'' it as long as
he pIeases, so long as the price of Erie
advances. If Erie is in demand, the
price will advance. When it is quoted
at Al it has advanced 81 share, and
our friend is 500 ahead in the transac-
tion-that is, he would be were it not
for the brokers' commission, which is
4 per cent, for buying and for selling,
total of for both buying and selling
which to our friend would be $25;
hence the net profit at Al would be $40.
At 45 il would be s475. If the stock is
held longer than the day of the pur-
chase, the customer must pay interest
on the 81 900, the cost of the stock at 9
per cent. When the customer decides
that he has made sufficient profit from
the transaction he simply says, :sSell
my 100 shares of Erie" and the broker
sells it. If the sale is at As, the Gus
toner is credited with the profit, less
commisson and interest. He then has
/ 400 and some odd dollars, which
stands for margin in his next trans
action; or he may withdraw all his
money and close the account. After
Two or three such operations his capital
has doubled, and then, instead of 100
shares, he may purchase 200. Many a
beginner has increased his original capi-
tai OF 81 900 to $4,000, and even $50, ;