What Can I Do if I Want to Learn the Stock Market?

Stock prices are volatile.

The stock markets of the world trade together with the bond and currency markets to perform important financial functions. Stock markets exist to attract investment capital for companies to build profitable businesses. In return, investors receive a share of the profits proportionate to their investment. The result is that capital moves to business activities that provide real long-term profit opportunities, enriching business and investors. Learning about the stock market means studying current events, geography, math and history.

Fundamental Analysis

Stocks trade on public and private exchanges.

There are many approaches to learning and investing in the stock market. Generally these fall into two approaches: fundamental and technical analysis. Fundamental analysis begins with a bottom-up approach. Analysts study whether general economic conditions are conducive to stock investment. Analysis then proceeds to relate current industry and corporate trends. Finally, the choice of individual stocks are made based on comparative ratios of stocks in the same industry. Consider a college class to learn the accounting and decision-making skills necessary for investing.

Technical Analysis

Read and practice to learn about the stock market.

Technical analysis is concerned with only price and volume of stock movements. The technical analysis divides all stock data into one of three trends: bullish or rising, bearish or declining, and sideways movements. Technical analysis has become increasingly popular because of the ease of calculation made possible by computers. Technical analysis is concerned with capturing a stock movement, either long or small, by measuring the statistical probability of different price trends. Trends may last from minutes for the day trader to years for the investor.

Exchanges

Stocks are ownership shares of a company.

Stocks are bought and sold in public markets called "exchanges." There are several exchanges in the United States alone, the best known being the New York Stock Exchange. Visit and tour an exchange. Stock options, another derivative, trade on the Philadelphia Exchange. Exchanges are important because they follow strict rules of conduct that allow investors a measure of safety in dealing with brokers and other investors. Exchanges are regulated by the federal Securities and Exchange Commission.

Stocks Represent Ownership

Stock movements can be bullish, bearish or sideways.

Each share of stock represents a proportionate share of the profits, losses, stock dividends and stock splits of a company. Stock ownership allows you the risk of investing in return for dividend and capital gain rewards without taking personal responsibility for the actions of the company. Historically, diversified long-term stock investment has provided better investment return available to investors than any other class of investment. Read the annual reports of major companies and become acquainted with their functions.

Read and Practice

There are a variety of books and training websites available to learn about stock trading. Trading should never be directly entered into without much practice and appreciation of the many nuances that could cause the beginner difficulty. One recommended practice is to develop a practice trading account and measure its progress over an extended period of time. Extend the practice account to stock options and futures and learn how leverage effects your investment decision-making abilities.

References

• New York Stock Exchange Website: Home

Resources

• NASDAQ: Investor Resource Guide to Stocks