Forex Trading

Stock Market for Dummy

It is not easy to start trading on the stock market when you have no financial background at all. It shouldn’t be difficult to prosper, though, if you follow certain guidelines. Being organized and disciplined are two very important factors in this business. Don’t let all the information you gather confuse you. Make sure important decisions are taken before you start risking your money.

Decision 1 – Investing or Trading? The answer to this decision can be found in the type of person you are and the time you intend to dedicate to the stock market. Here is a guideline that should help you understand the type of investor or trader you can be.

Type: Long/Short term investor Hold Period: Months to Years Time Required: A couple of minutes every week Being an investor is different from being a trader. Investing can be done through a broker and shares bought can be kept for a long period of time. Daily market fluctuations are not really your problem and the time required to check your investments is really minimal.

Type: Swing Trader Hold Period: Days to Weeks Time Required: A couple of minutes every day Swing traders normally buy and sell shares every week, with the intention to hold to their positions for only a couple of days, sometimes a week or two. Being a swing trader, more time is required in front of your computer, or on the phone with your broker, and the profit is made as a result of a move in a stock that occurs in a short period of days.

Type: Day Trader Hold Period: Minutes to Hours Time Required: Several hours every day Being a day trader is the ultimate in stock market trading. This requires a good setup which should include a PC with a couple of monitors, and a fast internet connection. Day trading is not for everyone, but if mastered could be the most profitable form of buying and selling shares on the stock market.

Decision 2 – Fundamental or Technical? Buying or selling a stock should always be a result of a trading system already in place. If not, that is where trading becomes gambling. A trading system can be either based on news and figures related to a particular stock, known as ‘fundamental trading’, or one could have a system based on charts and analysis of the stock, known as ‘technical trading’. A combination of the two can also exist, but normally traders tend to stick to either one or the other system.

Again, this decision is also based on the type of person you are. If you are a person who likes watching news every day and don’t find problems in getting to know all there is to know on a particular stock, getting to know about the company, its directors, what they really do, their products and services, then trading based on fundamental analysis could be for you. If on the other hand, you prefer working with charts and software that can be used as a technical tool, as well as back-testing systems, then you would probably feel much more comfortable trading the technical way.

Beyond the decision Whatever decision you take, one of the most important aspects of trading is to stick to your system and your plan. Don’t improvise during market hours. If your system is not trading profitably, you can always go back and see what’s wrong at a later time when you are not trading.

This is only the beginning. You can never stop learning about the stock market. Don’t rush into it just for the fun of it. Treat it as a business, from which one day you can reap great benefits from.

Stock Market for Dummy / Sandro Azzopardi

Sandro Azzopardi is a professional author who writes articles on his web site and local newspapers. http://www.theinfopit.com/business/stockmarket/stockmarketfordummy.php

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The Fascination in the Stock Market

The stock market has fascinated people all through the years. Many have made fortunes, others have lost them investing and trading on the stock market. But what constitutes the stock market and how does it work?

Many countries have their own stock exchanges where one can buy and sell shares for company stocks, options and bonds that trade in that particular market. The US stock market is the most volatile of them all, where traders and brokers perform millions of transactions every day. The most common exchanges in the US stock market are the New York Stock Exchange, Nasdaq and the American Stock Exchange.

The Price
The stock market is a place where people, either on behalf of their clients, their organizations, or themselves, bid to buy a number of shares of a particular stock at a specific price. On the other side, another set of people asking to sell the same stock for a different price. These are technically called the ‘bid’ and the ‘ask’ price. When a price from the bidding side agrees with a price from the asking price, a trade is performed. In heavy volume transaction stocks, the difference between the ‘bid’ and the ‘ask’ price is marginal.

Why does the stock market fluctuate?
The answer to this is the variation between the supply and demand of the stock in question. In simple terms, when a particular stock is demanded heavily and the supply is short, the share price for the stock goes up since people are ready to buy that stock with a higher price than the current price, and people who want to sell are ready to wait and sell at higher prices.
When the reverse happens, people want to get rid of the stock but there are not enough people ready to meet the selling volume on the other side. As a result of this, the price goes down since people are willing to sell the stock at lower prices than the current price, and people who want to buy are ready to wait for the stock to go lower. The volume and quantity by which this happens relies heavily on the number of shares demanded against the number of shares supplied and the level of aggressiveness buyers and sellers (also known as bulls and bears) are buying and selling their stocks.

Shares Ownership
Once a number of shares are owned, as a result of a stock market transaction, these shares can be kept for a specified amount of time. This time can be years, months, weeks, days or even minutes. This depends on whether the shares have been bought for a long term investment (years and months), short term investment (weeks and days), or as a trading scalp, which normally lasts for hours, minutes, and sometimes even just a few seconds.

When entering the stock market, the first question one needs to ask is whether he/she wants to be an investor or a trader. This depends on whether one is looking for a long-term commitment or a short one. While investing in the stock market can be controlled quite easily, requiring only limited amount of knowledge, trading, on the other hand, is quite a different ball game requiring much more knowledge and skill to perform and master.

The Fascination in the Stock Market / Sandro Azzopardi

Sandro Azzopardi – A professional author with over 5 years experience who writes on local newspapers and magazines: http://www.theinfopit.com/business/stockmarket/stockmarket.php

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Understanding Futures Trading

Many people have the notion that commodity futures trading is very difficult to understand. It may only seem difficult when you are new to futures trading, but once you understand the inner workings and get a hang of it, you will be well on your way to success.

People have a common misconception that commodity exchanges determine or establish the prices at which commodity futures are bought and sold. This is not true. Prices are determined by supply and demand conditions. Just keep in mind that if there are more buyers than sellers, prices will be forced up and vice versa.

Buy and sell orders, which originate from all sources and are channeled into the exchange-trading floor for execution, are actually the ones to determine the prices. These buy and sell orders are translated into actual purchases and sales on the trading floor.

The major function of the futures market is the transfer of risk, and increased liquidity between traders with different risk and time preferences, for instance from a hedger to a speculator. Futures trading is a method used to eliminate or minimize risks that occur when the prices in the market fluctuates.

Futures contracts are exchange-traded derivatives. A futures contract is traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price. Futures contracts are basically for assumption or hedging.

There are two groups of futures traders: the hedgers, who are interested in the underlying commodity and are seeking to hedge out the risk of changes in price; and the speculators, who are interested in making a profit by predicting market moves and buying a commodity “on paper” for which they have no practical use. For example, commodities in the market can be bought today at today’s price, with the speculation of selling them at a higher price in the future.

On the other hand, hedging protects against fluctuations in market prices. This protection is made by allowing the risks of price changes to be transferred to professional risk takers. For instance, a manufacturer can protect itself from price increases in raw materials they need by hedging in the futures market.

Hedging has two types, hedge sale and hedge purchase. A person can buy a commodity and sell futures at the same quantity as protection against fluctuation in prices when he is still holding the stock.

You might think that this is gambling, but the fact is that speculation refers to the condition of a legitimate enterprise based on the current condition of the market trends. However, it is very risky for inexperienced futures traders who try to predict the market and speculate without having enough resources or experience.

Since the prices are distributed via telecommunications network and the internet, it makes online futures trading very convenient and simple for an individual. Nowadays many brokers offer their services for trading commodity futures online. Because more risk is involved in online futures trading than stock trading, you must judge for yourself whether or not it is worth the added risk of trading commodity futures online.

Keep in mind that an investment in futures can result in losses. Past performance results does not necessarily indicate future performance results.

Understanding Futures Trading / Susan Jan

For more on Futures Trading visit futures-trading-expert.info. Susan also writes at health-and-fitness-hub.info.

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