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