The Best Timing In Doing Stock Market Trading

Timing Is Everything

Aim for the best timing in stock market trading. It is the only option for a successful stock market investor.

In order to raise capital and invest in the business, companies issue their stocks and the public may then buy and sell. The price varies depending on the supply and demand. This is what a stock market trader takes full advantage of.

The business of stock market trading can offer better profits to the investor compared to ordinary stock enterprise. The stock market offers a wide variety of stocks to choose from for any investor to go on with stock trading. There is always a moving stock out there amongst the thousands of others registered.

However, a careless attempt to proceed with stock market trading can produce undesirable result. Big losses can be incurred if the market trend is not properly predicted. Small profits would also frustrate the purpose of doing stock market trading. An uninformed stock trader may also end up waiting for that decisive moment that would never come.

Market Timing

To avoid the adverse effects of poor stock market trading, investors use market timing to forecast when the market will change its course. Market timing presumes that the decisive point can be predicted ahead. The direction of the market is predicted through a thorough examination of the price and economic data.

Best Timing

The consistency of such trend prediction is subject to many factors, that is why the aim of any would-be successful investor is best timing. At first glance, market timing sounds like a guaranteed way to make it big. This however requires exertion of considerable effort and persistence in carefully studying the various factors.

Avoid mere speculating. Speculating is a desperate move when the investor hasn't done his homework.

Investors also buy stocks because they got a hot tip from someone. Most of these tips however prove to be false, as they are mostly given by parties with vested interests.

Market timing requires involvement in research to know the company's history and calculate the trend by charting the movement of the stock's price. This involves analysis of the value of the stock to come close to accurate in predicting the trend. This is ideal in developing standards for when to buy and when to sell for the investor must accurately settle on the proper time to sell. One must also correctly determine when to regain, reselling the stock bought when it reaches its peak value. This way, the maximum profits can be realized.

The Stock Market System

The stock market system is an avenue for the trading of shares of stock of listed corporations. As a corporation is formed, its initial shareholders are able to acquire shares of stock from the point of subscription when a company is created.

When a company starts to be traded to the public, the primary market comes in where those who subscribe to the initial public offering (IPO) takes on the shares of stock sold from point of IPO. When those who bought into a company at IPO point of view decides to sell their shares of stock to other people, they can do so by going to the stock market.

The stock market is a secondary market for securities trading wherein original or secondary holders of a company's shares of stock can sell their stocks to other individuals within the frame work of the stock market system.

The stock market has buyers of stocks or those who wants to own a part of the company but wasn't able to do so during the initial public offerings made by the company to the public when it has decided to list itself as a publicly listed company.

The secondary market or the stock market allows other individuals to sell shares of the company when the initial shareholders may have realized that they want to sell their shares after gaining either significant profit or realized significant loss from point of acquiring a company from its IPO price.

As the stock market has developed and progressed over the years, the way shares of stock are transferred from one individual to another has become more complicated and more challenging to be regulated. Technology has aided in providing more efficient ways of transactions. Front and backend solutions are put into place that helps direct the exchange of shares of stock in timely and secure manner.

Public education over how the stock market works is one of the primary concerns of the investing public in order to promote the trading activities of the stock market to other individuals who may also benefit from doing transactions over this secondary type of equities market.

With the abundance of relevant company information on performance of publicly listed companies, this information will help the investors to become more aware of the directions of the companies where they have share of stocks on and this will also aid them in directing their investment strategies.

Pros And Cons Of A Stock Market

Considerate the environment of the stock market, as well as its pros and cons, doesn't have to be a complex one. So many people fear that in order for them to know the nature of the stock market, they have to understand a extent of stock and marketing terms and all that jazz.

On the other hand, some people saw behind the veneer of all these economic gibberish, and saw the potentials of what they could get from investing in the stock market.

In a nutshell

Simply put, the stock market is the market to buy and sell stocks and shares. This is where company stock gets traded. The term is also used to describe the totality of all stocks in one country. That is why we hear reporters talking that "the stock market was up today" or that "the stock market went down after the dollar fell to the euro."

What are the pros and cons of the stock market?

One of the reasons why we need the stock market is because it is an important factor for the US economic system to operate. Through the stock market, US companies improve their financial viability and expand their operations by raising funds from selling stocks. Without the stock market, our companies become slower in their growth and might falter in the increasing competition in the US as well as against international companies.

Another reason for the existence of the stock market is that it also has role in personal financial planning. This is because many individuals buy stock shares as part of their personal financial strategies. More importantly, most Americans have a stake in the stock market because retirement programs invest in stocks. It has shown that retirement programs earn a lot more by investing in common stocks than other options such as saving the funds in banks.

Of course, the stock market also has its downsides. Remember that the stock market is not a tool for instant success. True, there are cases of one getting wealthy by investing in the market, but this involves having shares in various company stocks, which means a lot of research, time, and money. One also gets rich when some stocks become "hotter" such as the "dot-com" bubble in the nineties, but when the initial buzz around these stocks falter, the value of these stocks tend to crash.

Stock Market Game

The stock market is a game.

When you're still a kid, have you ever played the board game Monopoly? This is a game that deals with properties, banks, infrastructure, and millions of colorful dollars.

A lot like in Monopoly, the stock market is a game in which you have to decide the buying and selling of your properties. Although in the case of the trading business, you are making stock market decisions.

The money you get in Monopoly when you have circulated the whole board game would be the dividend or the payment in the stock market, this is also known as earning per share. The amount of the money you get would be determined by the properties you have in the game. Just like in the stock market, the more shares you have, the larger amount of money you would be given.

When you are getting bankrupt in the game of Monopoly, you have the power to sell your colorful houses or building when you need to regain your finances. Just like in your stocks, when the market falls, you have the authority of which shares to sell out and which shares to retain.

In winning the Monopoly game, you are obliged to keep your properties before the construction of your houses and hotels. You would lose to your challenger if you sell these properties to him even for twice the normal price of your property. Just like in the stock market, making lots of money does not mean you are successful in what you're doing. In order for you to win with your stocks, you should be able to double your property to give you a higher dividend of shares.

In playing the board game, you need an opponent to start the game. It's your opponent's job to prevent you from owning many properties and collecting large amount of money from him and from the bank. Just like in the stock market game, there are also factors that prevent you from the success of your shares. These don't necessarily have to be other investors, but it could be the taxes you are obliged to pay or the interest of your stockbroker from your dividend.

Playing the game of the stock market could be done even with just a little amount of money. Just like in the board game, all you have to own are colorful play-money for you to own properties and collect more money in the future.

Although the trading system could be compared to the board game, you should take the stock market seriously. Why? Because this is real life and real money is at stake.

Winning Attitude in Stock Market

Many people often wonder why some make it in the stock market and some don't. They sometimes sigh and say, "They have all the luck, that's why." True enough, luck can be a factor in one's success or failure in the stock market. As most experts will allow, trading at the stock market is very similar to gambling. They both involve a great deal of risk. But unlike gambling, success or failure in the stock market is not solely dependent on luck. It has much to do with two things information and attitude.

Information has much to do with success or failure at the stock market. First of all, information makes stock trading more than just guesswork. Analyzing trends can help investors make educated guesses regarding their investments.

One important aspect that often goes unnoticed is the proper attitude investors must have towards investing. Too often, investors fall prey to the wrong type of attitude in investing. This leads to wrong decisions, and impulsive buying or selling. What are these attitudes, and how should they be avoided?

1. Many Investors Exhibit an Impatient Manner

Unfortunately, many investors get into the mix just because they are under the impression that they could get rich overnight as result of a few investments. This is so far from the truth. In fact, successful portfolios are built over time. Stocks take time to mature and appreciate. If the investor never realizes this, he or she might be looking to make a quick buck. And when he or she is unable to, he or she may become discouraged or may sell his or her shares for a lower price.

2. Many Investors Look to Take the Risk to Be Overnight Millionaires

Warren Buffet, the Wall Street Tycoon has this advice for investors: don't bet all your marbles on stocks that seem to be skyrocketing today. They could crash tomorrow. Buffet confides that he has always built his empire over stocks that were stable and exhibited continued growth over the years. He says that these stocks are preferable to volatile stocks that could crash anytime.

Other investors fail to diversify their portfolios. Depending on how much risk one is willing to take, an investor should divide his or her portfolio into low-risk, medium-risk, and high-risk categories, and invest in such stocks. Some people are too risky and put their heads on the guillotine with high risk investments. Others will not risk their necks on any investments. One should choose an attitude that is just right for his or her risk tolerance.

How Stock Market Price Rises and Falls

Understanding how stock market price rises and falls is similar to understanding the prices of other products in the market. It also follows the law of supply and demand. Price of stocks rise and fall due to the following reasons:

1. Company profit projections and image

A company's growth and profit forecasts describe how capable a company is in delivering its promises to its investors. These numerical projections are carefully prepared by a company based on their past profits and projected additional profits due to new products and services, operations and infrastructure improvement.

Aside from profit forecasts, company image can also make an impact on a company's profitability. Rumors of change in management, take-over, mergers, and even personal issues about the company's top executives can affect the company's image.

For example, a rumor of a merger between two big companies projects more stability and greater profit projections for both companies. As more investors would want to buy stocks from these merging companies, the demand for their stocks will rise. Based on the law of supply and demand: the greater the demand for stocks, the higher will their prices be.

A bankruptcy rumor about a company can send its investors to sell all their stocks. If there are more sellers than buyers of stocks then the supply (of stocks) is greater than the demand for stocks thus, stock price will fall.

2. Political Economy

General news about the local and global politics has an immediate impact on the economy and consequently to stock market prices. Politics and economics are correlated. Positive news such as lower unemployment rates, increased productivity, peace and order, and strong confidence in the government has positive impact on the economy. Such news encourages more local and international investors to open companies in a certain location or country. This in turn would generate more jobs, and as an effect, would encourage more trading in the market at higher stock prices in general due to the increase in demand for stocks of different companies.

On the other hand, negative news such as political instability and turmoil, security problems such as terrorism and insurgency, frequent strikes, and inflation has negative impact on the stock market prices. Investors are driven away by these things and close-up. As an effect, more stockholders would sell out. This creates more sellers than buyers thus stock market prices fall.

3. Interest rates

Higher interest rates are associated with a slump in economic growth. This creates a sluggish environment where investors become apprehensive in buying stocks. Either they keep the status quo or sell out their stocks. When the demand for stocks is not high, prices will go down.

Stock market risks: Is my money really worth it?

So, finally, you have your money you can call your own. Naturally, you want to see your money grow. Saving your money in a bank doesn't entice you, seeing it offer too little growth potential. You want something that gives a little more risk, with the hopes of having a much larger financial return. You turn to the stock market.

But wait! Are the risks involved in investing in the stock market worth my money? Investing is a good tool to increase you money, but you have to keep an open mind and know what to look for.

Needless to say, investing in stocks is a risky business. There are some risks that fortunately, you can control.

For example, you must guard against investing in "hot" stocks. True, some get wealthy in investing in "hot" stocks such as the "dot-com" bubble in the 1990s, but when the initial buzz around these stocks begin to slide, so does your investment. Once they fall, they really fall hard in a short period of time. This includes your money and others like you who invested in these stocks. If you really need to invest in these stocks, you have to keep a constant eye on them and try to sell them when they start to level off or drop.

To avoid such risks, you must diversify your portfolio. Basically, it means buying a little bit of a lot of different types of stocks and bonds. In that way, if one stock gets down, another one of your stock might be up and will help you recover some of your losses. It is a good idea to have some stocks in the technology sector, telecommunications, biomedical, and consumer corporations. In time, you could add your portfolio with precious metal and diamond indexes, and some general investment funds.

There are also companies that offer "safety stocks". It will be a sound decision to have several shares of companies such as this in your portfolio. This is because such stocks rarely fluctuate and most often offer a slow and steady growth, thus giving you an assurance in your investments.

Do not rely on tips saying that this stock is "going to be big" and the like. These tips are often unfounded, and these stocks are almost worthless. Investing in these stocks might give you a higher return but in the long run, these stocks will just give you worries. Read the Wall Street Journal or watch the stock reports on news networks to know more about your stocks. Also check relevant websites to see how your stocks have been performing in recent weeks.