Stock market trading is not rocket science. Like any other form of investing, it requires a certain degree of knowledge and a certain level of attention. If anything, the skills you learn in trading can help you in other areas of any business as well because you adopt habits and practices which are universal to the business world.
Understanding stocks requires you to understand an industry and how the market affects the industry and performance of a business. It also teaches you how to forecast and predict stock price fluctuations that help you make more profitable trades.
Programs offered by Tim Sykes a renowned penny stock trader help new investors and traders alike learn the fundamentals as well as the advanced strategies and techniques needed to make sustainable profitable trades that lead to millions in profits. Here is an article on Tim Sykes by Trade Options With Me that sheds more light on the subject.
This guide will give you a walkthrough on what you would need to cover before you start trading in stocks and turn your savings into investments to make sure your hard-earned money does not depreciate over time.
STOCK EXCHANGES – THE MARKETPLACE
Before you start trading in stocks, you must first understand what stock exchanges are and how they operate. Stock exchanges are where different companies “list” their shares, allowing the public to buy and sell these shares. Such companies are aptly named public listed companies are the reason companies opt to list their shares on an exchange is to raise capital and build a reputation in the industry and market.
Almost every country has its own stock exchange with some, like the United States that have more than one. In fact, the two largest stock exchanges by market cap are located in the United States. The New York Stock Exchange and NASDAQ, valued at $31 trillion and $11 trillion, respectively. Market cap is the value of all the shares of all the companies listed on an exchange combined. Both NYSE and NASDAQ list several famous names such as Apple, Google, Nestle, and even Facebook and Uber.
Traders buy and sell these shares and the shares of one specific company are referred to as stock. While there are many factors that contribute to share price, the buying and selling of stock also have a great impact on its share price as the concept of demand and supply plays a role. If there are more buyers than sellers of a specific stock, then the demand for a stock is high and the price will rise. Adversely, if the number of sellers is higher than buyers, then the supply is more than demand and the share price will drop.
ANALYSIS – THE KEY TO MAINTAINING A HEALTHY PORTFOLIO
To be a successful trader and maintain a healthy investment portfolio, you need to be able to carry out an analysis of stocks. This is a vital part of the process and you need to keep an eye on a number of factors to carry out an effective analysis that could help you carry out more accurate predictions and make a good profit off your investment. When analyzing a company, some of the factors to consider include revenues, profits, business practices, marketing strategies, operations, liabilities, market share, earnings-per-share, etc.
All of these factors play a role in the share price of a company and keeping yourself aware of them keeps you apprised of any potential threats to the price stability and lets you judge future growth of a share. For example, if you’ve invested in the shares of an airline and you become aware of an incident with a passenger that will adversely affect the reputation of the company, you could judge how much the share price will drop and decide on selling the stock accordingly.
With big companies, like Facebook and Google, an analysis may not be as vital, especially if your trading is mainly for yourself and not on a commercial scale. Such companies have too much money and have too high a standing in the market to be adversely affected by small incidents. They also do well in all the factors mentioned above and, as a result, have a steady share price with steady growth. Investing in such companies bears a small risk and almost as little profits as well.
Companies that would require a fair bit of analysis include companies that issue Penny Stocks. These companies tend to be young and have smaller operations, meaning the risks they face are significantly higher than bigger established companies. However, the increased need for analysis is paid off especially when these penny stocks appreciate fast over a short period of time as they are usually projected to do.
Investment strategy plays a huge role in the profits you make from trading in stocks. Experience is the best teacher, but it can end up costing a trader too dearly, especially in the beginner stage. The best way to approach this element of trading is to educate yourself on different aspects of the market and industry. The internet has facilitated this significantly as there are so many resources available online including books, articles, forums, social media communities, and courses.
There are entire websites dedicated to trading that feature regular periodic articles and blog posts, each touching upon a different topic or explaining different investment strategies. Some might have paid subscriptions, but you might get value for your money especially if it adds to your knowledge of trading and economics.
The same principle applies to courses. In fact, if you’re looking to trade only in certain types of stocks, you’re bound to find some course that will cater to your needs and tastes. For example, if you’re looking to increase your knowledge of penny stocks and learn different tips and strategies to turn over a profit, then Timothy Sykes is a great option. To learn more about what the course offers and how you can benefit from it, head on over to Trade Options With Me.
To recap, the fundamentals behind becoming a successful trader are an understanding of the market, proper analysis of the companies in your portfolio, and educating yourself on different strategies and market trends. As is with any walk of life hard work is important but by staying true to the fundamentals, the process does become easier to manage and your return on investment, time, and effort all become more worthwhile.