The stock market is full of sharks. A lot of you want to be big boys and swim in the big boy pond. You cannot do that unless you are armed with some much-needed knowledge. Do you want to survive the sharks? You need to know how to play with them. That way they do not take your money.
The Four Rules of Playing With the Sharks On the Playground
1) The first thing you need to know is what a stock market is. Not knowing what a stock market is or how it works is one of the best ways to get eaten by a shark. A stock market is basically a group of people using their own expertise against each other. The stock market is very much like the animals in the sea. You have the little fish and the big fish.
Some traders are going to stay little fish, like a minnow. They are happy with just small trades, here and there. Other traders will be a great white shark looking to eat the little ones. These are the traders who spend a lot of their time earning the knowledge so they can make more money.
The more knowledge and experience you have, the bigger you grow. Your goal depends on what you want. Do you want to be a little fish making small trades every so often? Do you want to make as much money as you can, eating up the other fish as you go? Ecnpremium.com
2) The stock market is very adversarial. It is called, “kill or be killed.” Every trader has their own views. Some are correct and some are not. It is your job to judge for yourself which traders and investors are telling the truth. The best way to become skilled as to learn everything you can about your trades. There are people who do intentionally lie to you. They want you to take the bait. They want you to lose your shirt. You need to get great at blocking out the noise.
3) What does make a stock go up or down? There are a lot of factors, including supply and demand. You should study all the factors involved. The stocks usually fall when there are more sellers than buyers. They rise when the opposite is true. Investmib.com
4) Why is the market so difficult to predict? That is a question that is asked a lot. We even get it from the expert traders. Factors to consider include things like the value of the stock and the person’s choices. There is also a trigger event. That is something that triggers the stock to go the opposite way. Some events are easy to spot and some are not.
Time to talk about the value of a stock. Some stocks start out high and then go down low. Other stocks have the opposite effect. The price is mostly determined by the activity in the market. That is why some start out low and go high later on.
You also need to consider a trader’s choices. A lot of traders start off using their logical side. They end up using their emotion to make a choice. That choice is dependant on a lot of things. Some traders are easily swayed by certain things. Some traders do a knee-jerk reaction and invest in something.
When should you buy or sell?
Ultimately, the best time to buy is when everyone else is very pessimistic. You should sell when everyone is very optimistic. It is hard to dictate these things. That might be a general rule of thumb, but traders should determine everything on a case by case basis.