Stock Market Game:Ups & Down

Getting involved in the stock market can be risky and lucrative all at the same time. It is risky, because a person can lose their capital investment over night. It is lucrative, because a person can just as easily double or triple their capital investment in the same amount of time. There are two ways people tend to buy stock. The most popular way to buy stock is through a stock brokerage firm or an Internet-based stock trading platform hosted by one of these firms. This is often seen as the safer way to buy stocks. The reason is because a person has a lot of control over how quickly they can buy and sell stock shares. Alternatively, some people still buy stocks straight from the company offering stocks. The advantage of this method of purchasing stocks is that the stocks are sent directly to the stock holder. This means, the stock holder retains physical proof of the stocks they own in their possession. This latter method is more difficult, but it can force a person to be a more disciplined trader.

Is Risk Bad?

If a person thinks that risk is a bad thing, then it may be difficult for them to develop a stomach for trading in the stock market. The stock market can swing wildly, up-and-down, in very short durations of time. A seasoned stock trader must learn to accept that risk is simply a normal factor of being involved in the stock market. How a person reacts to the risks involved in trading stocks is often going to determine how well their investments perform.

Research Is CriticalBefore buying shares of stock in any company, it is always prudent to research that company thoroughly first. Looking at the company’s balance sheet, seeing that they have actual assets, determining if they have enough cash to stay in operation, and tracking their performance over time are all key pieces of information a trader needs to consider. Just because a company’s stock seems to be moving up over the short term, this does not guarantee that the stock is healthy. In fact, a stock trader should resist recklessly reacting to short term spikes and dips in a stock’s performance. By studying a stock over the long term, a trader can start to develop an intuition about whether the stock price is too high or if it is low enough to get in at a discount. Another thing to consider in your research is the supply chain. If a company is selling smart phones and their business is booming, then it might be a good idea to find out what other companies are supplying parts that are used in the construction of these smart phones. Learning about these internal market business to business dependencies will help you to find hidden stocks that are often untapped goldmines to invest in.

Following Trends

The stock market is perhaps the most trendy place on earth. Stock prices move up and down because of trends. If you are good at spotting trends before they happen, it is a smart idea to ask yourself what companies are on the verge of profiting from these trends? Having stock in these companies, as the trend is starting to happen, is often one of the best ways to earn money in the stock market. In the same breath, it helps to know when a trend is reaching its end so that a person can sell their stock before an industry experiences a major dip or hard crash.

Conclusion

The stock market is a place where any aspiring investor can get their feet wet. Even if a person does not want to risk their own money at first, it is certainly okay to play the market with pretend money on paper. This way an investor can learn from their mistakes, develop strategies and learn to spot successful trading patterns as well. When they are confident that they are ready to jump in with both feet, they will then have the skills they need to play the market wisely.

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