Stock Market Trading System

If you are a beginner in the stock market, you should be familiar with how the system works. It is important that you know what you are getting into.

The trading system, in definition, is the choice you would make on what method to use in entering or buying and exiting or selling the stocks. Choosing the trading system is the most vital part for your money’s success.

In choosing a trading system, it is important to research and find a low-risk and high-opportunity companies when buying stocks. Knowing the fundamentals in the price signals and when to sell your stocks when losses occur, would maintain your money’s growth.

The trading system has been divided into several groups for the investors to know which company they would enter shares with.

1) Blue chips. This refers to the shares of the huge companies. These companies have a trace of profit progression and usually have at least 4 billion dollars in returns yearly. Although entering in to blue chips would provide a large capital in the investor’s part, the payment from the shares would be consistent – the dividend is in the middle of winning and losing shares.

2) Growth stocks. This refers to the companies that grow quickly. The management of these companies invests the profits from the stock for the development of their company. Companies with growth stocks seldom pay dividends to investors. And if they do, the payments are lower than other companies.

3) Income stocks. This refers to the companies’ stocks that have high earnings. Income stocks are stable and pay a large dividend or payment to the shareholders. These kinds of shares usually make use of mutual funds for senior citizen plans.

4) Defensive stocks. This refers to the companies’ stocks that always remain stable even if the market falls. These are the kinds of stocks that could easily reclaim its place in the market when it losses stocks. Since these companies defend their stocks, the investor would lessen the risk in losing money. Defensive stocks are always suitable to purchase because it is suitable in an unstable market and when the economy suddenly falls.

But before entering into one of these categories, one should analyze the risks and dividends of the company. Plus, you should think outside the box and cautiously examine the company’s accounting flow, the distribution of the profits to all investors, and other profile of the company.

When you have established the trust on a company’s stock, it would be easy for you to buy or sell in the trading system.

Problems with The Stock Market

"Investors often cause stock market problems"

With the advent of online banking and online trading, the stock market has opened its doors to virtually every person willing enough to grow their money.

And yet, despite this, not everyone has joined the bandwagon. The biggest factor being the potential risk involved in trading stocks.

The stock market is among the most volatile financial institutions in business. And it’s this volatility that tends to be the biggest problem with the stock market.

Almost any reason, real or imagined can cause these extreme fluctuations that often affect the stock market’s credibility.

Real factors such as the weather, political instability, political decisions, war, terrorist threats, boycotts and strikes, economic trends and international trade or even company scandals also become factors to the stock market problems.

Bad weather such as hurricanes affects certain industries such as oil production. This then drives the cost of petroleum products higher as production gets limited. This causes a cascading effect that drives stocks of oil companies higher.

Political instability in a country can affect investor confidence thus lesser investing is done. This causes the shares of local companies to slide downwards.

Boycotts, strikers and terrorist threats have also proven to be the bane of the airline industry. Shares of airliners have tumbled throughout the years with every terrorist attacks all over the world.

But aside from uncontrollable factors such as natural disaster (or war), the common underlying link that allows these other reasons to affect the stock market so significantly is investor psychology.

Humans are prone to herd mentality. Often, people confirm with the actions and directions of other people.

This is a common mistake in investing.

An example of this is during the early 90s when dozens of dot com companies sold their stocks in the stock market. It created an artificial demand for stocks of companies that did not even provide real and concrete services.

These stocks soared in value as more and more enthusiastic investors bought them. This happened up until the time it was realized that these companies did not actually post any considerable profit to sustain the value of the shares.

The stocks then tumbled and virtually lost value as investors frantically sold their shares.

This tendency to panic and depend on the direction of others is among the real causes of problems with the stock market.

There are two actions arising from this mentality:

a.) panic buying

b.) panic selling

Of the two, panic selling causes the most harm since it causes a steep and quick drop in the value of shares.

The best way to avoid causing these problems is to practice due diligence and to keep a level head while investing.

Stock Market Game

The stock market is a game.

As a kid, have you ever played the board game Monopoly? This is a game that deals with properties, banks, infrastructure, and millions of colorful dollars.

Like in Monopoly, the stock market is a game in which you have to decide the buying and selling of your properties. Although in the case of the trading business, you are making stock market decisions.

The money you collect in Monopoly when you have circulated the whole board game would be the dividend or the payment in the stock market. The amount of the money you collect would be determined by the properties you have in the game. Just like in the stock market, the more shares you have, the larger amount of money you would be given.

When you are getting bankrupt in the game of Monopoly, you have the power to sell your colorful houses or building when you need to regain your finances. Just like in your stocks, when the market falls, you have the authority of which shares to sell out and which shares to retain.

In winning the Monopoly game, you are obliged to keep your properties before the construction of your houses and hotels. You would lose to your challenger if you sell these properties to him even for twice the normal price of your property. Just like in the stock market, making lots of money does not mean you are successful in what you’re doing. In order for you to win with your stocks, you should be able to double your property to give you a higher dividend of shares.

In playing the board game, you need an opponent to start the game. It’s your opponent’s job to prevent you from owning many properties and collecting large amount of money from him and from the bank. Just like in the stock market game, there are also factors that prevent you from the success of your shares. These don’t necessarily have to be other investors, but it could be the taxes you are obliged to pay or the interest of your stock broker from your dividend.

Playing the game of the stock market could be done even with just a little amount of money. Just like in the board game, all you have to own are colorful play-money for you to own properties and collect more money in the future.

Although the trading system could be compared to the board game, you should take the stock market seriously. Why? Because this is real life and real money is at stake.

Important questions before invest in the stock market

There are some very important questions here before you decide to invest your money in the stock market.

First of all, which money do you use? We suggest money for your investment is the one that is not used to fulfill the requirement of everyday life. Then which one is that? The answer is your idle money. What is idle money? Idle money is the one that you don't need in the close time and if you utilize it in the stock market will not bother your day to day life.

Then how much is the amount from your idle money? Regarding that, it is of courses that everyone who wants to invest must know the ability of his/her self. Normally we recommend to range from 10 to 20 % from total of your idle money. You don't have to release moreover unless you are very sure that you will get profit from your investment in stock market. Always remember that making investment there having lost probability which is larger than other investment instrument like deposit and saving.

After you decide to make an investment in the stock market remember this important aphorism. “Don't put your eggs in one basket”. Among investor this is a common aphorism especially for you which have ever experienced in stock market investment

Yes, this term is used to depict that in the stock market investment we don't ever put down all of our idle money at one kind of share. However, we better disseminate that into some kinds of share that having different liquidity level and fundamental ability. This is to anticipate if one of your share/ stock degrades and mainly will decrease your investment value.

Thus again before you invest in the stock market remember three things which I have mentioned above:

1. Use your idle money.

2. Maximum amount to invest is 20 % from your idle money

3. Spread your Investment. Don't you ever invest your money only at one stock/ share.

Happy investment and try your luck!

Online Stock Investment Strategy

Wanna Trade? Do It Online!

The first continuous trading on a stock exchange was done in the 17th century in Amsterdam. Prior to this, in 13th century France, product traders used to meet in a house which they later called “Bruges Bourse”. Nowadays, stock markets can be found in most countries but the biggest markets can be found in the United States, Japan, China, and the United Kingdom.

Long before the advent of online stock market investments, trading was done by individual buyers and sellers. These are business persons who do their own trading activities. Later on, as market participants in the stock market increased, stock brokers began to represent individuals and other big firms who are interested to buy stocks.

A wealthy businessman has his own set of stock brokers representing his business interest in the world’s big stock markets. Brokerage houses were then established to cater to the increasing demands of the trend. These big firms are called brokerage houses and examples include Morgan Stanley, Merrill Lynch, and Charles Schwab.

Due to the Internet’s capacity to connect many people from different places at the same time, the process of buying and selling stocks has become faster, easier and less expensive. Online stock market investments have been availed by many investors because of its unique features compared to the traditional stocks trading.

Online stock market investments are easier to do because if a buyer or seller decides to do online trading, he does not have to pay a stock broker anymore. Stock brokers can charge up to as much as $100 per trade, while online stock market brokers can charge as low as $10 per trade.

Online stock market trading allows investors to do all transactions in front of the computer. An online stock market investor can also check and manage with his stock portfolio in real time using a computer. Several online stock trading companies have opened their websites to cater to the demands of their increasing clientele.

Online stock market investing has made the business of trading easier, faster, and cheaper. An investor who does online trading will not need to call his broker to conduct business. All he has to do is go the stock broker’s website and indicate the stocks he wants to buy or sell and these orders will be processed in real time.

These online stock market brokers or stock market websites, as they are called, also contains a lot of additional services in their websites. They can provide online stock market traders with stock market information, and other relevant insights.

How Not To Fail In Doing Stock Market

Investing money entails a great amount of risk. Like they always say, “It takes money, to make money.”

Money doesn’t grow on trees, you know.

But it doesn’t necessarily mean that to achieve good profits, one has to invest heavily and risk greatly. That is not the case all the time. A well-informed investor can make sound decisions that will help him earn considerable profits with minimal loss.

The first lesson a successful businessman will tell you is that any endeavor carries potential risk along with potential gain. The trick is to determine if the profit is worth the risk. If it is, it is now time to consider if you are willing to take the risk.

So before you start trading, ask yourself this:

a.) What are your achievement goals?

b.) Are your investments going to lose money?

c.) Are you willing to take bigger risks for better profits?

Setting your achievement goals will allow you to know how long you’re willing to wait for a stock to gain profit. It will also give you a limit on how much you’re willing to lose. It will also give you an idea on how to go about investing in a stock.

If you choose a low-return investment, it will mean that either you increase the amount you invest or increase the length of time invested.

After you have made up your mind with the above questions, there are some tips you may want to use to evaluate your trading philosophy.

a.) When to invest. Ordinarily, you want to trade all the time. You get excited when you see shares go up or when they fall down. You make decisions based on a whim and factors that don’t usually affect a stock in the long run. The best traders wait 50% of the time waiting and studying how a stock performs. They do not trade every day and all the time.

b.) Discipline yourself. You are so excited to make trades that you trade on a stock that looks half-decent enough rather than waiting for the best stock to come along.

c.) Small moves big payoffs. Don’t waste time dabbling in so many small stocks with minimal profit. Watch out for big stocks and concentrate on a few.

d.) Do not be too emotional. Making money is exciting. Losing money can get very depressing. Detach yourself from your emotions; otherwise, you won’t be able to look at things objectively.

Trading stocks is a high-risk, high-profit venture. Dabbling in the stock market half-cocked is suicide. Take your time. Study, research and be patient. After all, it’s your money, so it’s your loss.

The Stock Market System

The stock market system is an avenue for the trading of shares of stock of listed corporations. As a corporation is formed, its initial shareholders are able to acquire shares of stock from the point of subscription when a company is created.

When a company starts to be traded to the public, the primary market comes in where those who subscribe to the Initial Public Offering (IPO) takes on the shares of stock sold from point of IPO. When those who bought into a company at IPO point of view decides to sell their shares of stock to other people, they can do so by going to the stock market.

The stock market is a secondary market for securities trading wherein original or secondary holders of a company’s shares of stock can sell their stocks to other individuals within the frame work of the stock market system.

The stock market has buyers of stocks or those who wants to own a part of the company but wasn’t able to do so during the initial public offerings made by the company to the public when it has decided to list itself as a publicly listed company.

The secondary market or the stock market allows other individuals to sell shares of the company when the initial shareholders may have realized that they want to sell their shares after gaining either significant profit or realized significant loss from point of acquiring a company from its IPO price.

As the stock market has developed and progressed over the years, the way shares of stock are transferred from one individual to another has become more complicated and more challenging to be regulated. Technology has aided in providing more efficient ways of transactions. Front and backend solutions are put into place that helps direct the exchange of shares of stock in timely and secure manner.

Public education over how the stock market works is one of the primary concerns of the investing public in order to promote the trading activities of the stock market to other individuals who may also benefit from doing transactions over this secondary type of equities market.

With the abundance of relevant company information on performance of publicly listed companies, this information will help the investors to become more aware of the directions of the companies where they have share of stocks on and this will also aid them in directing their investment strategies.

Best Stock Market Investment

Some financial experts say that engaging into a more lucrative but challenging world like investments are not specially made for the faint hearted.

With the economy seemingly riding on a roller-coaster ride, investing with the right stock seems to be next to impossible. However, with the advent of information technology, people from all over the world go crazy over stock market investments. It is because the convenience of information technology had found its place in the world of investments and computing.

Today, stock market investments are selling like hotcakes. It seems that it has always been the focal point of every investor to get a stock no matter what.

So, for those who would want to get the best stock market investment they should look into the following for advice:

1. The stock market is risky business

Generally, most people believe that buying stocks are as easy as 1-2-3. Of course, it can and in fact anybody is capable of doing it. But the problem lies on the fact that few people only know when to sell. And that is, in its greatest sense, the heart of stock market.

So, the best advice for people to get the best stock market investment, it is best not to gamble everything that they have on it, especially if they don’t have a good understanding of how it works. It’s better to loose a little than loose really, really big.

2. The “trailing stop strategy.”

Most experts incorporate this when getting stocks. What they usually do is to “ride” their stocks really high, and maintain an exit strategy in the event that things get out of hand. This is where the liquidity of their investment is extremely vital to one’s business. That is, they should know that whatever liquidity they have can be easily converted into cash.

3. Invest only in what you are comfortable with.

Even if particular investment opportunity, say, an exciting IPO of a big company, looks very attractive, it is a must for every investors not to invest on it if they are not prepared to risk losing their money on it. In this way, people will be able to get the best stock market investment by following this very important advice.

Finally, most stock experts recommend today that people who want to get the best stock market investment should use the every day costs in the stock market investment strategy. It would be better if investors would always carry a handy calculator with them.

The most important thing about stock market investment is not so much to pick the best but to avoid the losers.