I'm completely new to stock market. I'm planing to explore it. Is it possible to lose more money than you invest?
For example: if I buy $100 worth of some company's stock, and let's say the market crashes, or that company goes down. Will I only lose that $100, or more?
Also, how can I tell which company is better to invest in?
The price of a stock cannot go below zero, so the amount of money you can lose is limited to the value of your investment: ie if you buy 100 shares of a $10 stock the most you can lose is $1,000, the value of your investment. It is theoretically possible to lose more than you invest if you buy on margin (ie borrow money to invest) however you don't need to do this.
Also if you aren't a complete junkie for the stock market it is easier to invest in mutual funds, or exchange traded funds. For example if you buy SPY or IVV–two funds that track a stock market index called the S&P 500–you'll get roughly the market rate of return without having to do much of anything.
If the company goes down then you will lose some of that money depending on the number of shares that you have as well as how low the drop went.
You can lose 30 dollars or more
But the commission is something that you need to take into account as well
Do not short sell stocks
You can buy stocks lower than 5 dollars and wait for them to go up or in the case of some investors, bet on a stock that is expected to increase in price dramatically and profit from there
First you have to explore more about stock market before investing in that.
If you have invested long on a stock, betting that the stock will go up, you can lose no more than you invest plus the commission you paid. If you are investing short, betting the stock will go down. You can loose more money than you invest if the stock keeps going up.
Chances are, you will lose all you "invest". Newby investors buy stocks on "gut feeling" or based on a "tip" from their barber, or some similar financial wizard. As a result, the new investors loses a sizable (if not all) portion of their money.
Don't be too eager to put your money to work. First, spend an hour a day reading finance articles on Yahoo Finance. Find articles by and about Warren Buffett, arguably the greatest investor of our generation.
Money is hard to earn and easy to lose. Be careful.
When the market (crashes) you don't loose anything, you still holding on your shares. When the market is up, you still not make anything too. You are holding onto your shares. The loss and gain happens when you decide to sell.
And no, you can't lose than 100% of what you initially invested
Unless you have a margin account and have borrowed from the broker, all you will lose is what your put in. However, if you are investing in a taxable account, you can charge the loss as carry forward capital loss on your tax return and use it to offset future capital gains. As far as what company for investing, look for a company that was not named after a piece of fruit or someone's face.
8 Deadly Sins of Investing
"Many time common stocks are subject to excessive and irrational price fluctuations in both directions as the consequence of the ingrained tendency of most people to gamble or speculate…to give way to hope, fear and greed."
Cheap, yet expensive
Ignoring a Portfolio
Unwillingness to Book Losses
Entry at Peaks, Exits at Lows
Allowing your Broker to Trade
Here's good place to start exploring: read "Investing For Dummies." It's an excellent overview. There's more to investing than just "the stock market."
Yes exactly you will only loose that much amount if company goes down. But it happens less rather than generally it goes up.