Candlestick Trading Blog
July 19, 2008
Stock Market
The stock market is a public or a private market that exists for the purpose of trading company stock and derivatives of company stock at an agreed upon price. They are listed in the form of securities on a stock exchange. The stock market allows businesses to raise extra capital through the selling of shares of their company in the market. The Dow Jones Industrial Average, along with the Russell 2000 and the S&P 500 are designed to show how those companies traded are performing. These averages indicate the general health of stock prices and also indicate to the investor the tendencies of the markets. If the prices of stock as a whole tend to rise, it is referred to as a bull market. Conversely is the stock are falling as a whole, it indicates to the investors a bear market. Participants involved in the open market include individual stock investors as well as hedge fund traders whose orders end up with a professional that can carry out their order. To own stock means that the individual is a shareholder who owns a portion of a company’s profits. There are three big stock exchanges in the United States. These include the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), and the National Association of Securities Dealers (NASDAQ). The NYSE is a listed exchange in which orders are handled by a specialist who works with the trading floor to trade stock. The specialist’s job is to match buyers and sellers orders. The NASAQ is a virtual listed exchange in which all of the trading is completed over a computer network. Buyers and sellers are electronically matched. In order to buy and sell stock on the stock market, you can go through a stock broker who can place orders on your behalf. They will charge a commission in order to provide this service or you. You can also trade stock online, in which you still go through a brokerage firm however you use trading software to place your trades instead of going through a live person. Investment strategies used to invest include fundamental and technical analysis. Fundamental analysis is generally used for long-term investors and this method analyzes the financial statement for the companies at interest. This method of analysis takes a look at the general economic conditions and business trends as well in order to determine the companies to invest in. Technical analysis is typically used for short-term trading and it is the study of price movement in the market. This method requires the use of stockcharts in order to predict future prices trends and it doesn’t focus on a company’s financials. The stock market is a very exciting and interesting place for investors, but it can be very dangerous for investors with little to no education. There are a lot of different methods and strategies available and each investor much study and practice the method of their choice before attempting to invest. Investors can also practice paper trading as a great way to practice without actually trading real money. It is highly recommended by investors to practice online paper trading successfully for at least 6 months to a year before actually investing real money. Knowledge, patience, and practice are the keys to successful investing! Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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