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Stock Market Investing – Planning Your Financial Success

Making money by trading in the stock market requires learning just how the market functions and using prudent strategies to gain a great return on your investment.

You need to become comfortable with the basics of stock market terminology and strategy to help determine how to approach your investment strategies. Upon understanding the basics, you can learn how to maximize trading opportunities for maximum gains. The stock market is definitely NOT a get-rich-quick scheme.

How to Succeed

It is nearly impossible to be successful with trading in the stock market until you know what you are doing (though some claim a monkey throwing darts at a “buy” or “sell” target could be as successful as any investor – but that’s another discussion…). Success requires proper planning and preparation as well as a great deal of knowledge about the market.

You need to make calculated, well-informed decisions to succeed with your investments while learning what to trade, when to trade it, and what techniques and strategies to use for maximizing the return on your investment.

Following are a few skills and techniques to help improve your stock trading proficiency.

Learn the Right Timing

You want to gains a sense of how long to hold on to your investments before selling. Knowing whether to hold onto your stocks for only the short-term or to hang in for the long-term is one decision you have to get right – at least when you have a lot of money invested.

A successful trader must be able to discern when the timing is right to buy, sell or hold. Timing is everything in the stock market, because selling too soon or late can make the difference between earning and losing money.

Make Decisions Based on Logic, not Emotions

All your decisions should be made based on a prudently calculated decision that takes into account all pertinent factors of the stock market. No matter how tempting it is to act off a hunch or your emotions (“This one’s a winner – I feel it in my bones!”), you should do your utmost to avoid it.

Sometimes your intuition may be right, but you want to be extremely cautious when making rash, expensive decisions.

This principle goes both ways: you also cannot allow your emotions of fear to paralyze you from making good, solid moves. Some decisions may be difficult due to the risk involved, but may be the best choice in the long run – such as “cutting bait” and selling when your stock price is spiraling downward. Weigh both the likely short-term and long-term scenarios.

Permitting your emotions to guide your decisions may work in a card game, but it’s a recipe for disaster in stock market trading. The best decisions are made drawing conclusions from the enormous amount of available data you have about the performance of the stock market and the specific stock you own.

Stock Market Basics – A Beginner’s Guide

Once you have decided that you need to invest your money to get some decent returns on it, people will usually suggest you that stock markets is the best way to earn money. But you need to know first what are markets and how to invest in them.

The answer lies in two terms that make stock markets that is stock and markets. In the common man language, shares is what you own as part of the company even though that portion which you own may not be enough to have a say in the running of the company. Market is where you trade something and the buyer of an item meets the seller of the item. In this case the stock market is where the seller of the share of a particular company meets the buyer.

The stock markets are very much like the other markets which have a common set of rules governing the trade and these markets also have a common set of terms and terminology which are used by the people. In today’s world the stock markets also represent the health of the economy as the economy is made up of people who buy stuff from these companies. If we buy more then the health of the company is good which in turn reflects in the price of the share on the exchange. If overall the prices of shares are going up then it suggests that the health of the economy is very good.

Share markets have come to be synonymous with exchanges which in actuality is what is the stock market and the exchange of stocks takes place here with all the orders from people willing to buy or sell the shares coming here. The exchanges are regulated by a regulatory body known as Stock Exchange Commission or the SEC. The SEC makes sure that a few large players do not make abnormal profits by wrongful means and deny the small investors their share of the profits.

The markets also have their own set of rules as to what kind of share can be traded where. For example the shares of small companies which are not eligible for trading on the New York Stock Exchange or the NASDAQ are either traded on the American Stock Exchange or the OTCBB.

Stock markets have their set of rules as to how and when you pay money when you buy shares and vice versa for selling shares. It also has rules about how the ownership gets transferred to an individual from the person he buys the shares.

This is how and what of the stock markets for the uninitiated and it will hopefully help you understand the dynamics better.