What should a new stock market investor know?
We run a small stock investment club and we train all new investors in our club using stock market articles, software and games. Currently there is euphoria in the stock market and several people are investing money with a very ambitious return on their investment.
In this article, we will share with you some basic facts about stock investing.
What is the stock market?
Common stocks are owned by a company and sometimes it is referred to as stocks, securities, or equity. This means that you are entitled to a part of the profits of the company and to all the voting rights attached to the share. The most common method of buying stocks is through a full-service or discount brokerage firm.
Why do people invest in the stock market?
People invest in the stock market for high return potential for the life of the business.
What are the risks of a stock market investment?
However, your initial investment is not guaranteed in the stock market. There is always the risk that the stock you invest in will decrease in value and you will lose your entire investment. As a shareholder, you will not receive any money until the creditors, bondholders, and preferred shareholders are paid.
How can you interpret Newton's Law to become a better stock trader?
Rule 1: "An action does not move tends to stay at rest and a trending action tends to stay in the trend unless it is acted by an equal and opposite reaction or unbalanced force."
This means that you should always trade in the direction of a trend. You need to look for a force that can come in the form of a drastic change in market sentiment or a drastic change in the performance of the specific company.
Rule 2: "The acceleration of a stock created by a market vote is directly proportional to the magnitude of that consensus, in the same sense as the agreement, and inversely proportional to the mass of action. "
This rule teaches us that a stock goes up or down in a trend due to a force created by market consensus. The movement of stocks is determined by the price of the stock and the amount of total market sentiment agreement.
The stock market is a zero sum game. In the realm of stock investing, we can interpret Newton's Third Law as "for every buyer there is a seller". This is the 3rd law of stock trading.
This means that there cannot be more of a buyer than a seller, but there can be very high or low demand for a particular stock.
Once you follow the Newton's Law of Stock Trading, you will see how easily you can invest in the stock market and make good profits regularly regardless of the bull or bear market.