When it comes to trading stocks, it's important to understand how to understand the principles of stock market analysis so you can decide which stocks to buy or sell for your portfolio, such as stocks belonging to the S&P 500, which contains some of the most popular stocks in the US from large businesses that trade on both of the US stock market exchanges. Without that knowledge, you could lose thousands of dollars and be totally lost in the system.
A stock market is a trading place where you can buy and sell stock (shares) issued by a company. Alternatively, you can also trade in several derivative products, which are basically financial instruments in the form of contracts, where the parties to the contract agree to exchange payments based on the value of a share at a future date.
On the other hand, if you were net short 50%, you made $75,000 in only a few weeks. As you can see, being a market maker you will either learn to anticipate and profit from the crowd, or you will find yourself serving chopped liver as a clerk in a Wall Street delicatessen in short order. Getting carried away with the crowd is a sure ticket to the deli. I didn't average 300% per year gain on my trading positions by being slow to learn. If I was wrong, the market kicked my ass hard. So you learn fast to develop the right reflexes. Now here comes the tricky part for any stock market trading as a market maker - when to load up, when is the bottom, when to dump, when is the top?
Traders have multiple tools to use when it comes to financial market analysis. They can use well-developed patterns, or use what is called support and resistance. Support is when they track the level from which lower stock prices are predicted to go up from and resistance is the height the stock is predicted to get to before it may go down in price again. The theory is that most stocks can be predicted to rise or fall after they get to a support or resistance amount. Some of the other methods of stock market analysis include:
The stock market index is a value, determined by the stock exchange authorities, that reflects the market's movement. This value is based on a handful of high-volume and reputed stocks - these are weighed and a number is given to them. This number or value fluctuates according to the movement in the prices of these stocks and this is what indices such as the Dow Jones, the NASDAQ, the S & P (Standard & Poor) are all about.
One more observation. If you can figure this out, let me know. The best stocks I have found have been in bear markets. True, you could buy just about anything in a bull market and be up, but the highest percentage gains in my book have been in bad markets. Not terrible markets, bad markets. I have never figured out why.
A stock market is a trading place where you can buy and sell stock (shares) issued by a company. Alternatively, you can also trade in several derivative products, which are basically financial instruments in the form of contracts, where the parties to the contract agree to exchange payments based on the value of a share at a future date.
On the other hand, if you were net short 50%, you made $75,000 in only a few weeks. As you can see, being a market maker you will either learn to anticipate and profit from the crowd, or you will find yourself serving chopped liver as a clerk in a Wall Street delicatessen in short order. Getting carried away with the crowd is a sure ticket to the deli. I didn't average 300% per year gain on my trading positions by being slow to learn. If I was wrong, the market kicked my ass hard. So you learn fast to develop the right reflexes. Now here comes the tricky part for any stock market trading as a market maker - when to load up, when is the bottom, when to dump, when is the top?
Traders have multiple tools to use when it comes to financial market analysis. They can use well-developed patterns, or use what is called support and resistance. Support is when they track the level from which lower stock prices are predicted to go up from and resistance is the height the stock is predicted to get to before it may go down in price again. The theory is that most stocks can be predicted to rise or fall after they get to a support or resistance amount. Some of the other methods of stock market analysis include:
The stock market index is a value, determined by the stock exchange authorities, that reflects the market's movement. This value is based on a handful of high-volume and reputed stocks - these are weighed and a number is given to them. This number or value fluctuates according to the movement in the prices of these stocks and this is what indices such as the Dow Jones, the NASDAQ, the S & P (Standard & Poor) are all about.
One more observation. If you can figure this out, let me know. The best stocks I have found have been in bear markets. True, you could buy just about anything in a bull market and be up, but the highest percentage gains in my book have been in bad markets. Not terrible markets, bad markets. I have never figured out why.
About the Author:
Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: How A Forensic Accountant Levels The Playing Field You have full permission to reprint this article provided this box is kept unchanged.
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