The Complete Stock Market for Beginners Guide
The most important part of stock market for beginners is discovering if you have the interest and passion, and therefore the focus and commitment, to spend many hours reading and analysing the markets. Once you have discovered this you will be in a much stronger position to decide whether you want to commit the necessary time to investing in the stock market, or indeed seek help from a paid service that will help you realise your goals.
This stock market for beginners guide will cut through all the hype that you will inevitably find and lay the important foundations which will allow you to make a much more informed decision about your investing strategy.
In this stock market for beginners guide, let me explain to you what the stock market is and its two purposes. There are two markets, the primary and the secondary. The primary market raises money for government using gilts or government bonds, and for businesses through shares entitling buyers a "share of the company stock." These shares can then be traded in the market which is the secondary purpose of the stock market.
All shares of a company are of equal size eg. if a company was worth £20 million and there are 10 million shares in issue, then each share would be worth £2. The price of each share can go up or down depending on the available demand/supply.
The demand/supply is affected by something called market sentiment. Market sentiment is the anticipated price movement the investment community believe will materialise based on a number of factors eg. how well the company is doing etc.
I could go into the hisory and actual process involved during day to day trading but I don't feel it would be particularly helpful in a stock market for beginners guide. Moreover if you are seriously interested in making your own investment decisions then you will need to do alot more reading on the subject.
What I will say is that if you decide you are going to educate yourself about the stock market, prior to investing, you will need to study historical trends very closely as part of that education. Otherwise I'm afraid your 'investment' will quite simply just be a gamble!
The next thing I think is very important in a stock market for beginners guide is to work out what kind of an investor you are. By this I mean do you want to invest short, medium or long term?
The short term investor eg daytrader, is a completely different animal from the 'normal' stock market investor. He will be able to make decisions extremely fast. He will be able to enter trades quickly and close them just as quickly if the need arises. Daytraders constantly watch and analyse the markets. They seem to have a sixth sense. Needless to say you have to be very experienced and have an 'ability' to be a daytrader.
I would say that if you plan to invest in the stock market short term ie. for anything up to 1-2 years at a time, you will have to spend several hours per day learning and analysing the markets and therefore should have a real focus and passion for doing this. The stock market for beginners guide recommends you need at least a couple of years experience before you become involved in this type of investing.
The medium term investor, lets say 2-5 years has still got to watch the markets and certainly have a good understanding of what is going on, but he probably would not spend any more than perhaps a few minutes to an hour daily looking and analysing markets. Again he would have to have real focus and passion to do this. Therefore, if you just want to make some money and secure your future then perhaps either a longer term investment or a paid service would be your best option.
Longer term investors, 5 years or longer are not so interested in daily, monthly, or even annual fluctuations and therefore can afford not to be too interested in the markets on a daily basis. This is because even apparent big losses in the very short term look insignificant once the losses are averaged out over many years. Likewise, large gains are not so incredible once averaged out over the long term.
Hopefully by now you are beginning to establish how much passion, interest and therefore focus you can bring to the table. If indeed you are passionate about investing in the stock market and look forward to spending many hours reading, analysing and deciding what your investments are going to be, there is another important factor you should take into consideration in the stock market for beginners guide.
Do you have any specific knowledge or interest in any area? Are you an expert in a particular field? If you can jump up a few rungs of the ladder quickly, because of your superior knowledge of a particular market, it will save you many months or even years to get to where you want to be. Also, remember the internet is a fantastic resource of free information - for example Stock Market Quotes - information which may be difficult to find or might take you many years to acquire.
Ok then, this page was meant for beginners to the stock market, and indeed for anyone interested in using the stock market to become wealthy. It is advisable to 'invest on paper' first if you do decide to take the plunge especially while you are acquiring some knowledge and experience. You must read regularly and again I must stress, only read from quality resources. Read what successful stock market investors have to say, people like Stephen Sutherland, Warren Buffet, Ben Graham or George Soros ie. people with documented success stories!
If your time is limited, you feel your talents are in other areas or you are a stock market beginner use a paid service.
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