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The Stock Market - What You Need To Know

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  • The Stock Market - What You Need To Know

    Have no doubt about it, investing in the stock market is not only one of the safest forms of investing, but it is also one of the most profitable if you invest in the right way, and stay in the market for a long time. Many who are not familiar with investing in the stock market may be surprised by those opening words, especially after the headlines of the past two years, featuring a stock market that seemed to go into free fall. But just take a close look at the stock market today, and you'll notice something interesting.

    The stock market has regained every penny of what it lost in the big economic crash about two years ago. Stocks in general are higher today than they were before the "Great Recession." Investing in stocks is far safer than putting down your money on more volatile products, such as gold, or some other commodity, like oil or sugar. It also brings a far superior return on investment than just sticking your money into a savings account, or buying super safe savings certificates.

    The first thing those interested in trading stocks must do is educate themselves, and gain a deep understanding of how the stock market works, and what stocks actually are. Some think: "Well, that's what my broker is for. He does all the investing for me, right?" Yes, but even if you do use a broker, you will be far, far better off if you understand as much as possible about what your broker is doing. You'll be better able to monitor and trust his or her decisions, or fire him or her if they lead you down a bad investment path. Of course, you don't need a broker. Any person can buy and sell stocks for themselves. You don't need a license. You are buying and selling stocks, just as you would buy or sell anything else. To use a broker or not to use one is one of the decision you will make about yourself. But before you get started, read at least one book about the stock market and trading, and preferably, two or three books. Learn everything you can.

    Once you are able to come at investing in stocks from a stand point of knowledge, you are in a much more solid position to decide your next step -- how much money you want to invest, and what your earnings goal will be over X period of time. One gem of advice that all seasoned stock traders will tell you is: "Invest in what you know!" That is key! You will almost certainly pick winning stocks if you are buying something you understand. What do you use a lot of right now in your daily life? What do you spend money on again and again because you want or need that product, and are satisfied with it? If you like it and buy it, chances are that a lot of other people do too. That's an indication the company who makes the product has a great future, meaning its stock will grow in value.

    You can also look at past performance and trends of stocks. Let's say you consider investing in Microsoft or maybe Best Buy, an electronics company. Just a quick search online will reveal the entire history of this company and where its stock has gone, up or down, over the past 10 or 20 years. That can give you a sense of where you think the stock will go after you buy.

    Another extremely important tip: Diversify! That means buying a lot of different kinds of stock across a variety of industries. That way, if one stock goes against you, chances are one of your other holdings will make up for it. To diversify means not putting all of your eggs in one basket. That's just common sense, and that's what a lot of stock market trading is all about -- good old common sense!

    Finally, the very best way to all but guarantee that you will make gains and money in the stock market is to stay in for the long term, meaning you should hold your investments from 3 to 5 or even 10 years and longer. Even if you own a stock that suffers a serious set back, it may come back, but it might also take 10 years. Truly safe stock market trading is not for the immediate gratification kind of person. There are people who do something called "day trading." This is an extremely high risk form of trading stocks in which people are basically "placing bets" on where a stock will go, up or down, within the space of a few hours or one day. Some people get rich doing this, but most probably lose a lot of money.

    In general, then, investing in the stock market works best for the patient, common sense kind of person who is willing to do some homework, and make intelligent decisions based on some research, and maybe just a tiny bit of intuition -- and a little luck never hurts!


    Article Source: http://EzineArticles.com/5931451
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    "Step into the arena and hold on to your hat. Don't get discouraged if you don't make 8 trillion dollars in your first month. Trading is not a get rich quick scheme. Realize that trading is a skill and just like any other skill it takes time to learn. Have convictions in your decisions in life and trading. Ignore the comments and "advice" of those that have never traded a day in their life."

    Good KARMA and positive energy abound.


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