The Stock Market For beginners can seem like a place to make some fast easy money. You sometimes hear how a stock went up two points, and say to yourself, if I had pulled the trigger on that one I could have made a lot of money. Fast easy money can be made in the stock market. But slow and easy is the way to go, and if you start at an early age, a fast and easy retirement is a reality.
Beginners at stock trading should learn all they can in order to succeed. You do not see a professional golfer pick up a club and become good at golf overnight. It takes time and knowledge to be good at anything in life. To start off, make sure you understand How The Stock Market Works. Start at the beginning and work your way up. You did not pick up a book one day and start to read, first you learned the letters of the alphabet.
How you are going to trade? knowing this is going to let you know what you need to be reading to learn about it. Are you going to scalp, day trade, swing trade, or buy and hold for the long run. Scalping involves buying or selling a lot of shares in a stock, and you are just expecting a small move in the price. Day trading is close to scalping but you are expecting bigger moves in the price, and you do not hold the stock overnight. Swing trading is when you buy a stock and hold it for two days to two weeks looking for a big move in the price. Buy and hold is when you plan on holding on to the stock for a long time. You believe the company is going to grow in value and the price is going to go much higher.
Next you will need to understand what fundamental analysis and technical analysis is:
Fundamental analysis relies on economic information, such as the companys financial situation, and quarterly earnings. This can take a lot of time reading each company's financial reports. Their is a paper called Investors Business Daily to help with this. If you are going to be investing in the stock market, you should be reading this paper on a daily basis. Technical analysis is the study of charts. The tool used for this is charting software. Charts show a stocks price movement, and with looking at enough charts we can see everything we need to know about a stock, just by looking at the chart.
Another important tool you are going to need is a Stock Trading System. If you travel to a place you have never been to before you do not just jump in the car and go. You look at a map, decide which way is going to be the best. The same is true with the stock market. Many beginners jump in without a plan of action, you have to have a plan, why and when you are going to make the trade, when you are going to take your profits, and you must stay with the plan. Practice paper trading before you start to trade to see how well you are doing. Once you are trading well on paper then it is time to open an account.
Now you are going to need some capital to start investing with. Do not start trading with money you can not afford to lose. If you have to start saving a little at a time until you have enough saved, then do it. Even though you went ahead and learned all you need to start trading, does not mean you are going to be a success at the very beginning. It is going to take some time, and you will lose some money. That is why you don't start trading with money you are going to need to eat with.
The stock market might seem hard at the beginning for a newbie, but once you learn the basics, Have a plan, and a little experience, you will be on your way to becoming wealthy.
What makes the stock market addicting? Easy. See answer above.
Although stock trading and gambling have as many disparities as they have commonalities, the comparison is entirely legitimate. Both deal with playing with money and both deal with risks. Both also have hope and fear components which often lead to addiction.
According to Paul Ashe, president of the National Council on Problem Gambling, the most gambling performed in the world is performed in the stock markets.
The active investor's addiction to trading is as strong as any form of addiction. Like gambling, active investing can be extraordinarily exciting for investors who, in turn, get carried away by winning.
Even medical studies confirm the release of the chemical, dopamine, when presented with the opportunity of a rising stock. The powerful allure of monetary rewards leads to the overwhelming urge of trading stocks.
It has been shown through brain imaging studies that the human brain treats the prospect of big profits the same way as the addictive nature of gambling, alcohol, drugs and other addictions.
So what specifically makes stock trading addicting? The reasons may actually be a lot more and may differ from person to person but the following can be considered true with most cases.
a.) Control. Investors appreciate the control they have over their situation and the freedom of making decisions for themselves in terms of trading and buying stocks. b.) Excitement. Like gambling, trading provides a certain level of excitement by making decisions and risks for the sake of a good return in investment. The more risk they take, the bigger potential for profit, the greater excitement it gives. c.) Easy return of profit. Casino gambling, lottery, raffle draws provide people a quick and easy way of earning money with minimal effort. This is true for stock trading as well. d.) Game. Active investors see trading as a game. It has entertainment value, a means of passing time, and the component of winning and losing. e.) Perpetuation. The problem with addictions such as gambling and active trading is the pitfall of perpetuation. As investors earn more profit with every stock trade, the more they are encouraged to continue trading, and at times investing more and more money. And with every loss, there is the desire to reverse the loss by intensifying their trading.
Investing via the stock market is a good way to grow your finances. But this should be coupled with the responsibility of keeping yourself in check before you cross the line into addiction.
Both Joe Grabowski & Ken Charnly are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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