There are a lot of books on stock markets out there right now and I'm guessing that you are not sure which one to choose. But I'm sure that you want to find a book that has very good information and of course teaches you on how to make a fortune on stock markets. A "how to make a fortune on stock markets" book will give a basic knowledge of stock markets but if you really want to understand the stock market, you have to watch it and maybe even have someone who is very knowledgeable in stock markets to teach you the ropes.



2 Simple Rules

For today, I'm actually going to tell you 2 simple rules. Even if you are a newbie to the stock market, you will be able to grasp these rules. I'm not saying that you can make a fortune using these 2 simple rules, but I can assure you that you can make some money out of your investments.

First Rule

The first rule is to observe any news of a product development by a company. What do I mean by this? Let say Company A who is involved in the fashion industry and they shipped their fashion wear to a lot of countries. Companies that shipped their products to other countries usually suffer losses of millions of dollars annually because their product gets damaged or stolen by the time the shipment arrives in the respective countries. Then through R&D, Company A announced that they have come up with a product that could deter theft and it would save them millions of dollars of merchandise lost through theft. This is the type of news that we should be looking for. The news of a product development that is going save a company millions of dollars is going to increase the stock price of that company. How?

When prospective investors hear of this news they will certainly invest in the company and it will cause the stock price of the company to increase. Before the investors put money into the company, you need to invest first, that is, when the price is low. When the price shoots up, you sell the stock for some gains. The factor that will cause the stock price to increase is the news of the product development not the product development itself.

Second Rule

The second rule links with the first rule. Now you know that the increase in the stock price is due to the prospective investors investing in a company. And they invest because of the news of a product development that could turn losses into profits. What if a company announced of a new product development but then the stock price of the company never increase? Why didn't it increase? It did not increase because investors did not invest in the company. Why didn't the investors invest? The reason might be that they did not hear of the news. This is where the second rule applies. You need to know the responsiveness of the prospective investors for that company. So how do you check the responsiveness of the investors?

Looked at the historical prices of the company's stock and analyzed the price increases against possible causes. If almost all the price increases have been caused by news, then you know that the investors keep track of what is going on in that company. This also means that they are responsive. Responsive investors lead to an increase in stock price.

Summary

To summarize what i have explain today is the news of a product development of a company will lead to investor buying the stock and in turn cause the stock price to increase. In order for you to take advantage of the stock price increase is to invest before the investors start putting money in, which means when the stock price is low. Don't forget the responsiveness of the prospective investors. They are the main reason for the increase in stock price.