14. Stock Market Trading
Stock Market Trading: The Ins and Outs of an Up and Down Market
Unfortunately right now, the words, "stock market" are followed by the whispered ghost of the word "crash". Hopefully things can even out before there actually is more than just a crisis, but for now, traders are watching the markets boards and indicators with wary eyes. The casual investor has probably often thought about pulling in their stocks and selling while companies are still solvent, but most brokers and advisors are probably trying to sway them from that thought. Stock market trading, even in an uncertain market, can be exciting and yes, even profitable. You simply must arm yourself with some education and know the ins and outs before making the first trade.
First, the stock market is not like a store. You do not push a cart through neatly ordered aisles of stocks, picking up an economy pack of this computer company and the two for one deal on that utility or another. It simply does not work like that. There are two basic methods for trades to happen: electronically or the traditional exchange floor. We all know the chaotic scene from movies, television and even cartoons: hundreds of people crammed together in a pit shouting " buy, buy, buy" or "sell, sell, sell" to people on upper tiers. There are clanging bells, papers being waved about, and people scurrying back and forth. It's a wonder that anything is done at all, but it is, and trades are accomplished this way every day on the floor of the New York Stock Exchange. Other exchanges accomplishes all stock market trading electronically through a system of interlinked computers that can make a trade happen in the flash of an eye.
Stock market trading can seem very confusing and far too risky, especially for the overly cautious among us. Of course, stocks do rise and fall, and there are risks involved, but that is true with nearly everything in life. Investing in the stock market simply takes some education and some sound planning. Working with a knowledgeable broker can reduce the amount of the risk, and only investing small amounts at a time can make it a worthwhile activity. Know your limits and invest below that cap until you start making some gains with your stock market trading. Once you have seen some fair returns, you can siphon those profits off to new investments, making sure to diversify as your portfolio begins to grow.