Understanding The Stock Market Is Not Hard
The key to understanding the stock market is patience and persistence. It’s not as hard as you may think, you just have to study and and willingness to constantly learn. The stock market is always changing and what happen during the last correction mostly likely will never happen again in you lifetime. What was also done to rebound from the correction will always be different.
You can pretty much say that there is always something new to be learning about the stock market, that is part of the reason I love it so much. I’ve been known before to have what they call Attention Deficit Disorder, but I guess that’s why I do pretty good trading stocks. What I did yesterday or last week on one trade will have to be a little different for the next because the particulars that are involved.
If that makes your head spin to think that what you learned with your former trades will never be used again, don’t get too dizzy. The experience from the past will help you be aware of the signs that are out thee when times start to get rough.
I listen to analysts all the time on different programs and in the magazine that I read and with all their education and degrees that they have, they still get it wrong quite a few times. No one can know everything, but the more you know the better off you and your portfolio will be.
Take a look at what happen with Lehman Brothers in 2008, they were looking to be bailout of their financial woes and didn’t get the government support. They ended up going bankrupt and their stocks fell to $0.03. Late in the year General Motors and Ford Motor Company while facing the same problem, had their shares fall to the $1 range. If you were to think that the same thing was going to happen to the automakers, you would have been wrong. A couple of weeks later the share of the two companies jumped almost 300% each.
Understanding the stock market is not hard if you just study the issues at hand and learn from your experiences. The basics are easy and once you have that down, it’s a walk in the park.
Tags: bailout, general motors, lehman brothers, stock markets, trading stock, Trading Stocks, Understanding The Stock MarketRelated posts
10 Tips To Understanding The Stock Market
In all types of business’ and different jobs there are things that people refer to as cheat sheets. Well this post is going to be your cheat sheet for understanding the stock market. This list consist of things that are needed to keep in mind when you prepare to trade. Helpful reminders to keep you on track so you don’t get derailed.
DO’s
1. Do your homework on each company that you want to invest in. You need to make sure that you reduce your risk with your investment.
2. Make sure that you leave your emotions at the door. You don’t want to make decisions with your heart. You will be a better trader when you can do this.
3. Have an exit strategy in place before you but into any company. Make sure that you have a limit stop in place to reduce the amount of your loss.
4. Make sure that you try to expand you knowledge in the area of stock trading, as well as learning different aspects of the stock market. There’s a lot more than just stocks involved in Wall street.
5. listen to different shows and news broadcast that involve the markets. I like CNBC, they cover the markets like no one else.
DON’Ts
6. Don’t take tips from people who say that they have some great information on a particular company. Insider trading is illegal and if they had information on a stock they wouldn’t be sharing it with you.
7. When a stock has just jumped up in one day, don’t think that that stock is going to do the same the next. A lot of times it will come back down from other investor who are taking their profits from the day before.
8. Don’t buy your total position at once. Ideally you would buy your stocks in increments so if the stock price drops you can purchase more to help lower your cost basis.
9. Don’t think that a bull and a bear market are the same. A bear market is more volatile and can fool people into thinking that it’s a bull market.
10. Don’t put all your eggs in one basket. What I mean by that is that you need to diversify you portfolio in several sectors. If you put all your money in the energy sector and the price of oil comes down, your portfolio will suffer on every position.
Tags: bear market, exit strategy, insider trading, stock trading, trading stock, Trading Stocks, Understanding The Stock Market, wall street