What the Stock Market is All About

In any business or moneymaking venture, preparation and
foreknowledge are the keys to success. Without this sort of
insight, the attempt to make a profitable financial decision
can only end in disaster and failure, regardless of your level
of motivation and determination or the amount of money
you plan to invest.
In the stock market, this rule applies to the nth degree, as
you are investing your own money in what could be
considered a high risk wager, and you are playing with fire if
you do not have at least a general background knowledge of
how it functions. Since having a background in any area is
helpful in guiding you down a path in that particular region,
the more solid your basis of investment knowledge is, the
more likely you are to profit from any attempt to trade on
the open market.
In many ways, trading on the stock market can be
compared to driving – you do not have to be an expert to
get behind the wheel of a car, though you are expected to
have some previous knowledge about basic traffic laws,
including moving violations, safety regulations, and other
legal vehicular infractions, which are learned through either
specific study and coursework or even through some form of
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simple exposure (such as the years you have spent riding
with your parents and others who have driven for years).
You should be able to comprehend the basic tools used to
navigate a car (where the break pedal is located versus the
gas, and how to use the rearview mirror, for example), even
if you have never touched a steering wheel.
The same is true in entering the world of the stock market.
While you do not have to know all the terminology (you will
not be short selling or determining your own long and short
positions at first, so you do not have to understand these
references completely, though you should be aware of
them), you should certainly be versed in the basic
functionality of trading stocks, bonds, securities, and other
commodities. And just like someone who is behind the
wheel of a car and getting ready to touch the gas pedal for
the first time, you should start out with caution and work
your way in slowly. A first time driver will first set the
mirrors to his or her own liking, then put the car in gear,
look for any interfering traffic, and ease onto the gas pedal,
never flooring it and testing the engine coming out of the
gate on the first attempt. Likewise, when you select your
first investment, you should choose something stable with
little fluctuation and not invest a large sum of money on this
first venture.
When a person is learning to drive, he or she will be
accompanied by another individual who is more experienced
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and can assist them in making better driving decisions and
offering corrections that will aid in learning to handle the car
more efficiently. In the stock market, there are
stockbrokers and other experts who can give you input and
advice to help you in building your knowledge of the
commodities in which you are interested, essentially
“steering” you toward better stock market buying and selling
decisions.
You could spend hours and hours researching the stock
market and its functionality, learning how to become
involved in the trade and who to contact to get in the game,
especially if your interest lies in the Foreign Exchange
Market, which goes far beyond the level of complication of
the domestic stock market. However, in this book, you will
find all the basic information you need to get started down
the path to trading success. All of the leg work and tough
research has been done for you, collecting the data and
knowledge into one source from which you can gain enough
insight to make you a successful trader on the open market.
All you have to do is read in order to gain knowledge and
wisdom, step by step that will bring you to a heady level of
success. In this ebook, you will find all such helpful
information, all brought together in one single source for
ease of reference.
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How Investment Works
Any time you are going to be putting your money into a
fund; it is a good idea to start by understanding what you
are buying into. The stock market is a complicated entity,
and doing minimal business in trading requires a fair amount
of basic knowledge, as well as the understanding and
acceptance of the high risk factor. The more you know in
advance regarding the functionality of the system, the less
likely it is that you will take a heavy hit, ending in
devastating loss.
First of all and probably most important in the trading
business, you should understand what stocks actually are.
When you buy or sell a stock on the open market, you
should keep in mind that you are dealing with real objects,
not pieces of paper; you are buying and selling real parts of
a particular company, its product, or some other various
commodity.
Owning a “share” means that you have actually bought into
the company or product involved and become a partial
owner of that commodity. Of course, you could be one of
millions of shareholders, as most companies and products
are broken into minute pieces of the whole, but you are still
considered an investor in that company or product until you
sell your shares.