Stock market basics

A Stock Market is a public market with the purpose of trading of company stock at an agreed upon price. Companies that are traded publicly are traded on the Stock Market. A stock represents the ownership of a company’s assets and profits. So when someone wants to sell shares of their company they would issue stocks. If these stocks are publicly traded, they would be bought and sold at a Stock Market, also called a stock exchange. A stock exchange also buys and sells shares and other such securities.

There are a large number of stock exchanges all over the world. The largest stock market in the United States is the New York Stock Exchange or NYSE which has been in business for the trading of stocks for over 200 years. This is a physical market at a physical location where traders on the floor of the stock exchange respond to calls of buy or sell. Another type of stock exchange is the NASDAQ which is a virtual stork exchange where the stocks get bought and sold in cyberspace. But the stocks are bought and sold by the same process and all stock exchanges are reported linked instantly by Internet.

If you want to buy stocks you would call on a stock broker who is licensed to buy and sell stocks at a stock exchange. You would not have to physically visit the stock exchange to buy and sell your own stocks. You can also do online stock buying and selling but al of these transactions go through some kind of stock broker whether a full services broker or a discount broker.

Because the trades of a stock take place at a stock exchange the status of every stock traded is instantly known. You can follow this action on a minute by minute basis if you so choose. You can also see how when something happens to a publicly traded company the company’s stock value may go instantly up or down based on the information received. And there may be literally thousands of people who are buying and selling stock on a Stock Market at any point in time when the stock exchange is open. Of course the stock exchange does shut down and is closed on public holidays or sometimes it is shut down when a national disaster takes place such as the 9/11 attacks.

In a publicly traded company, all of the company information is made public so if you are going to buy or sell a company’s shares you will have access to a vast amount of public information. A public company is regulated by the US Securities and Exchange Commission. So someone who buys and sells a publicly traded company’s stocks on a stock exchange has some knowledge about that company. They also have some reassurances that the company is handling itself per the SEC guidelines.

There are stock exchanges in most major cities in the US and around the world such as London, Paris, and Tokyo to name a very few.

So you discovered the stock market

Everybody wants to make money by trading stocks, however most traders don't. In fact, 90% of traders who do get into the stock market fail to make money by trading stocks. Most people actually lose money. 

It is possible to make money from the stock market, but not by following the rest of the crowd and doing what everyone else does. Here are some stock tips which can put you in a better position. 

1. Quit Listening to "Experts" Tell You Which Stock To Get Into 

Of course it is always a good idea to have a mentor, however they can help you to achieve your goals a lor better and learn how the stock market really does work. However, this does not mean that you should ask every single "expert" out there what stocks to get into now to make big bucks. 

Everybody looks at the stock market a little differently, it is a good idea to study the market and create a strategy based on of what you have learned from it. 

Instead of asking an expert what they think of a specific stock what about asking them how they trade, and what do they look for when picking stocks. That will help you out a lot more. 

2. Become an Expert Yourself 

The next step you can take is to become an expert yourself. Learn as much as you can about the stock market and how it works and then create a system based on of what you have learned. 

3. Backtest and Papertrade Strategies 

Not every strategy works. If you create a plan on when to get in and when to get out of a stock then the first thing that you are going to want to do is to backtest and papertrade it. 

Backtesting means going in the past and seeing how your strategy would have worked out for you in the past. Papertrading means actually trading with your strategy, but without real money. 

This way you can get a better idea on how effective your strategy actually is. Is your strategy making you money? Is it losing you money? That is an important thing to know. 

Getting Started

Before one starts in investing, whether day trading or long term, one must know that the market is like a random roller coaster. The track may go up without warning, or come to a sudden drop. This comes to show that the market is extremely risky. I have noticed that several people go into inesting, thinking they know what they are doing, but let me tell you, they don't. When you finnally have finished all of your studying and research in what ever investment strategy you may use, keep on learning. For when people go into investing without knowing much at all, they wil ALWAYS loose money. Even if they might rack up a few bucks on their first trade, they must know that this was a mere sign of begginners luck. When opening an account in an online investing company, make sure you have a few thousand bucks you can put into your portfolio right away. This will allow you to have a stable account with much freedom to invest in almost any company you wish.

Simple Strategies for Your Success

Once you have a stable investing portfolio, you must figure out how you are going to invest your money. Here are a few basic strategies that will come in handy for your investing career.

Scalping - Also known as spread trading, scalping is an easy way to invest your money, as well as make a reasonable profit. In scalp trading, one must invest between the bid asking price and selling price. This gap fluctuates throughout the day, allowing the invester to buy and sell almost immediatley for a quick and easy profit. Though this may be a more stable way to invest, one must research at least 1 week before buying shares of the stock.

Range Trading - One must look at how many people buy and sell a certain stock throughout the week. If a company has  low range/volume., then people do not buy the stock consitently and the company is very unstable. If a company has high range, then the stock is very stable and should make a good day trade.

Trending - In trend trading, one follows the current trend and invests right before that trend goes down. For example, say a company creates a new product that everyone loves for only a week. The investor would want to invest when the product comes out, and sell at the top of its sales. This is called "selling at the peak".

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