How To Read The Stock Market
Learning how to read the stock market is not such an easy thing to do. Of course many of you are asking, how am I suppose to make money in the stock market if I don’t know how to read it? The important thing is not to watch the entire market, but to watch the stocks you’re invested in or the ones you are planning on investing in.
I’ve been trading stocks for many years and to some extent, I still don’t know how to read the stock market. The overall market is just something to use as a benchmark in our economy. I’ve had days where I’ve made some big gains in one trading day, but the stock market was either flat or it lost some value.
If you’re one of the season traders, you’re most likely thinking that I was shorting the market, but that’s not the case. I invest in the stocks to go up in value, not decrease. Shorting a stock is one of the many stock market strategies that investor use to increase their profits, but as an average investor or beginner, it is not an easy strategy for you to use. Of course when the stock market has made some large gains in a short period of time, one might want to look at the Proshares Ultra-Shorts. The reason for that is because these stocks actually go up in value when the related industry, sector or indicies takes a dive.
I don’t recommend any beginner to try trading stocks in this manner. Instead learn as much as you can in regards to buying stocks to go up in value. Later on you can learn about shorting stocks. When you learn how to trade stocks and to get a feel for the market, then look into trading stocks on the long side (to go up in value) and short side (to go down in value) to increase you profits.
Learning how to read the stock market is something that takes a lot of time to be able to successful doing, but there is so much more you can learn about in the mean time. Study the companies you’re looking to invest in. Reading their balance sheets, listening to their conference calls and read their quarterly reports. That is what it’s going to take to make profit when buying and selling stocks on wall street.
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Understanding The Stock Market For Beginners
Understanding the stock market is not easy, but it can be done. You have to just take your time to understand it first before investing any money. When people think of the stock market for beginners, some will say that it’s too difficult too invest for yourself. I say they’re wrong.
Start off with learning how to read balance sheets and financial reports. If just the sound of that scares you, don’t be. It sounds harder than it is. Every quarter a publicly traded company has to release an earnings report. In the report, the company will file their income and expense for the previous quarter (3 months), as well as they will also give some information on what they expect in the next quarter. It doesn’t matter who’s report you read, you are just trying to get an understanding of the reports themselves.
As you learn about the how the quarterly reports effect the company’s stock price, you will move on to the next lesson to be learned. Learning how to read a company’s stock chart. The chart shows multiple information on how the stock is trading. On the chart you will find the price-per-share, how many share are traded, the bid/ask (sell/buy) price, and the open & close price. Of course there is other information, but that’s the highlights.
The toughest thing I feel there is to learn about the market is, the feel of the overall markets. The trend of the market can change so quickly just from some news being released. Even a good solid company can fall on value just because the overall stock market is in a down trend. It doesn’t even have to be the total market, it could be in the sector that the company does business in.
Let’s take the Agricultural sector. Caterpillar, John Deere and Kubota are all in the same industry. If John Deere comes out with their earnings report before the other two and reports a lost of revenue in the last quarter, not only will John Deere’s stock price will fall, but also the other may come down in value because investor pulled out some of their investments to be safe before the other release their earnings.
Which brings me to my last point. Emotions are the worse thing you can bring to the stock market. If you are a beginner in the stock market, this may be the hardest thing for you to do. First, you don’t buy stock in a company that you love. You can not get emotional with the stocks you invest in. If the facts are not there to support your investment, you shouldn’t be in the stock in the first place. Many times, you will get into a stock because the fundamental of the company were solid at the time, but as since changed. You need to cut all ties with the stock. Just because the company did good last year, it doesn’t mean it will do good this year. you have to consistently keep up with the companies that you invest in. You should spend a least one hour per week per each stock you own. Things change overnight and you’ll want to be ready for when you might need to buy more of the stock or sell it all.
Tags: agricultural sector, balance sheet, balance sheets, down trend, earnings report, investments, investor, money, quarterly reports, Stock, stock chart, stock market, Stock Market For Beginners, stock price, stocks, Understanding The Stock MarketRelated posts
Understanding The Stock Market
When the average person thinks of the stock market, they think that it’s too hard for them to do it and that they’ll lose their money. For those who don’t think that they have what it takes to do this, please think of this site as your guide to understanding the stock market.
It’s time that you take control of your financial freedom.
Financial freedom comes from learning what you need to in the world of investing and money intelligence. You don’t have to be an Einstein to reach that goal. If you were to read 1-2 hours a day on different aspects of investing, you will know more than enough to better secure you freedom.
When trading stock, there are many things that you need to be aware of in regards to each company that you invest in like financial statements, balance sheets, charts, and earnings reports just to name a few. You won’t need a BA in accounting to understand it all.
Financial statements provide an overview of a business’ financial condition in both short and long term. A balance sheet is like a snapshot of a business’ financial condition at a specific period of time, typically it would be a three month period. A balance sheet consists of assets, liabilities and stockholders or owners equity.
The chart is exactly that, it’s a chart to show you the price per share movement over a period of time (day, month, year). As for an earnings report, a company reports their progress (gains and losses) during a three month time frame to it’s shareholders and other investors in a very detailed manner.
Take your time to learn these tools that you will need to understand when trading stocks. There is quite few more things within the stock trading world and most of them will be covered here in layman terms to make it easier for you.
Tags: balance sheet, balance sheets, earnings reports, financial freedom, financial statements, stock trading, stockholders, trading stock, Trading Stocks, Understanding The Stock Market