| The stock market is like a gregarious, uncertain beast | | | | stock, but sell it nevertheless (by borrowing it from |
| you can never predict which turn it's going to take or | | | | your broker at a fee) because you feel its price is |
| which direction it is headed for. Having said that, let us | | | | going to drop and when the price does drop, you buy it |
| also admit that the stock market is one of the most | | | | back. Plus, you can buy or sell stocks at a future date |
| exciting markets in the world that can make your | | | | if you trade in the derivatives market. Then, you can |
| fortunes if you play it right. | | | | also indulge in margin buying, which in simple terms |
| And, if you want to play the stock market right, you | | | | means you borrow money to buy stocks, thereby |
| have to figure out how it ticks. Here then are basics | | | | exposing yourself to debt. |
| and fundamentals of a stock market that will clue you | | | | Stock Market Index |
| on: | | | | The stock market index is a value, determined by the |
| What Is A Stock Market? | | | | stock exchange authorities, that reflects the market's |
| A stock market is a trading place where you can buy | | | | movement. This value is based on a handful of |
| and sell stock (shares) issued by a company. | | | | high-volume and reputed stocks these are weighed |
| Alternatively, you can also trade in several derivative | | | | and a number is given to them. This number or value |
| products, which are basically financial instruments in the | | | | fluctuates according to the movement in the prices of |
| form of contracts, where the parties to the contract | | | | these stocks and this is what indices such as the Dow |
| agree to exchange payments based on the value of a | | | | Jones, the NASDAQ, the S & P (Standard & Poor) |
| share at a future date. | | | | are all about. |
| Stock Market Trading Explained | | | | Methods That Influence Investment Decisions |
| Many individuals and entities trade in the stock market. | | | | There are two methods that can influence investment |
| Small investors, day traders who square up their | | | | decisions in a stock market: (i) Fundamental analysis is |
| transactions on the same day, investment/financial | | | | a method, wherein the companies past and current |
| companies, banks, hedge funds, individuals with a high | | | | performance is analyzed along with the factors that |
| net worth, institutions, mutual funds all are involved in | | | | will affect its future profitability. Medium-long term |
| stock market trading. | | | | investors invest on the basis of fundamental analysis. |
| These individuals and entities place their buy or sell | | | | (ii) Technical analysis is another method that studies |
| orders through a market intermediary, called the | | | | the correlation of price and volumes over a span of |
| stockbroker. Majority of the transactions are routed | | | | time and then gives a buy or a sell signal on the basis |
| through a network of computers that execute orders | | | | of this correlation. |
| in a matter of seconds. | | | | There, those were basics of the stock market. If you |
| Stock Market Strategies | | | | want to trade successfully, then you have to |
| In the stock market, you can buy and sell the stocks | | | | understand how the stock market works, because |
| you own. Besides this, there are several strategies | | | | there is no other way, no other shortcut. Happy trading. |
| such as short-selling, which means you do not own the | | | | |