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