Ultimate List of 60 Basic Concepts in Stock Market

In the world we live in today there is no shortage of access to investment information. This in itself however, can be an enormous problem. Asking questions about how to invest, where to invest, and what to look for, can bring you many answers from lots of different sources. The trouble is diving through all the clutter to find relevant information to suit your needs.

So when looking to invest in the stock market, where should you start?

Below are some of the usual basic concepts when starting in the stock market.

1. Stock

Stock is ownership in a company. Each share of stock represents a small piece of ownership. The more shares a person holds, the more part of the company he owns. The more part of the company a person owns translates to more dividends he earns when the company profits.

2. Stock Market

The term stock market, as the name connotes, is a place where you can market or trade a company’s stock, which the corporation issues through shares in order to raise capital. Of course, capital is the cost that a company incurs in relation to producing its products and services.

3. Shareholders

The people who buy these shares are the shareholders, and the term can refer to an individual or an organization.

The term stock market can also apply to all the stocks available for trading (as well as other securities), for example, when used in terms like “the stock market performed well today.”

4. Trading of Bonds

The stock market involves the trading of bonds, which is a debt security that stipulates that the issuer of the bonds holds the holders a debt. It is exactly like a loan, only that it is in the form of a security. These bonds are traded over-the-counter, which means they are traded directly between two parties. Thisis opposed to exchange trading or the trading that occurs on stock exchanges or future exchanges.

5. Trading of Commodities

The stock market also involves the trading of commodities, which refer to raw commodities such as agricultural products (coffee, sugar, wheat, maize, barley, cocoa, milk products) and other raw materials (pork bellies, oil, metals).

6. Stock Exchange

The stock market is different from the stock exchange, which is primarily concerned with bringing togehter buyers and sellers of stock and securities.

You can participate in the stock exchange as an individual stock investor or as major player (large hedge fund trader). Orders at a stock exchange are usually made through a broker.

There are two types of exchanges where stocks can be traded. There is the exchange that has a physical location where verbal trading takes place. This is the more famous type of exchange because it is often depicted on TV showing animated trader shouting at each other, waving and running around frantically. That’s exactly how the stock exchange works. What happens is traders enter into verbal agreements on the prices of stocks. The other type of exchange is the virtual kind where traders deal electronically through computer terminals.

7. Common Stock

Basically stated, a common stock is, well, common! When you hear people talking about stocks in general, it is these types of stocks in that they are referring. It is simply a piece of paper that represents some degree of ownership of a corporation as well as some form of profit from that particular company. Interestingly enough, investors in common stocks receive one vote per stock owned to elect board members, the people who oversee major decisions made for the company as a whole, for a particular company. In the long- term, this type of stock means capital growth for the investor, however, if the company is forced into bankruptcy, the investor will not get paid what they are owed until creditors, bondholders, and preferred stockholders receive their payments.

8. Preferred Stock

In general, preferred stock is stock that is owned by preferred stockholders in that all of the companys earnings and assets go directly to the preferred stockholders first. Because preferred stockholders are paid before common stockholders, preferred stockholders choose to give up their right to vote in the election of board members. For this reason, preferred stockholders have no right in the selection process of the company. Preferred stockholders purchase stock in a certain company for monetary gain only in that their main goal in investment is earning a return on investment. Of course, there are four variations on preferred stock investments.

9. Voting

Preferred stock members can opt for the right to vote in a company in that they own stock. By doing this, they ensure the power to make sure that they receive all monies owed to them because they are able to bribe people into places of management. For example, Bob is a preferred stockholder who wants to ensure that his profits are paid to him no matter what happens to the company. Bob tells Tom, a man up for board election, that he will make sure Tom wins the election as long as Tom agrees to pay Bob his profits, whether the company goes into bankruptcy or not.

Adjustable Rates – Preferred stockholders receive an agreed upon profit based on stipulations provided by the company.

10. Convertible Stock

Preferred stockholders have the right to convert their preferred stock into common stock, allowing the investor to lock in their profit while they potentially profit from a rise in common stock. Basically, preferred stockholders are protected no matter what types of investment decisions they make.

11. Participating Stock

With this type of stock, preferred stockholders not only receive a set profit, but they are eligible for a certain percentage of the company’s earned profit over a set period of time.

12. Stock Trading

Stock Trading is of great interest to many people. Stock trading is an exciting, shorter term strategy where it is you against the market. Stock trading is one of the most exciting things you can do, but it does require a lot of skill and discipline to succeed. Stock trading is done at at a stock exchanges, which are places where buyers and sellers meet and decide on a price. Stock trading is affected by supply and demand. Online stock trading is considered one of the best ways for almost anyone to get in on the market. One of the best resources out there on the internet today for the investor looking to educate him or her self about online stock trading is http://dowtrend.com and http://tradelikethepros.com. Online stock trading is all about selecting the best stock opportunities and following your buy and sell signals.

Trading stocks online is downright fun if you enjoy the art of maximizing gains and protecting them by minimizing risks. Trading stock online has been becoming popular tremendously as a large percentage of population is having an access to the computers. Trading a stock basically means you are either buying or selling. You will need to be well-disciplined and goal orientated, as these are the main skills that separate winners and losers in the trading world. Online trading can be a good way to make a lot of money or to bring a small residual income to supplement your regular income. Being greedy in the online stock trading world can cost you a lot of money; however, you will be able to find advice everyone on the Internet about online stock trading; and if you follow the advice properly, then you may be able to make your living off of the stock market alone.

13. The Basics On Stock Trading

The most common picture that comes to mind when people hear about stock trading is the one we see in movies where men in suits basically shout and wrestle each other in some huge New York building to bicker about money. Although to some extent, there is some truth to this image, trading in the stock market is actually a more complex concept that helps many people earn money and keep businesses alive.

The concept of trading fundamentally consists of the buying and selling of stocks among individuals or companies through brokers. Through buying a share of stock or a share of ownership in a particular company, an individual can then benefit and earn money from however the company they invested on may fair in the market.

There are two basic methods in which the stock market operates –on the exchange floor where buying and selling is done more traditionally and electronically where technology takes on the exchange game.

14. Trading On The Exchange Floor

The trading that occurs on the more traditional exchange floor of the New York Stock Exchange (NYSE) is basically what most of us have become accustomed to from seeing it in the movies and on television. Basically, the NYSE consists of many brokers who negotiate the deals for individuals to be able to trade stocks.

As chaotic as the stock exchange floor may seem, there is actually a common pattern that occurs among most simple trades. First, an order to buy a certain number of stocks would be negotiated through a broker. After this, the broker’s order department would forward this arrangement to their floor clerk on the exchange. The floor clerk would then inform the company’s floor traders in order to find other traders that are willing to sell the equal number of stocks from the company that is offered to be bought. After the two parties agree on a price and close the deal, the message would be forwarded back up the line, and the broker would then inform the interested buyer on the final price.

Negotiations may take a few minutes or even longer, depending on the performance of the stocks as well as the market. For more complex trades and larger orders of stocks however, there may be a more complicated process but the principles basically remain the same.

15. Trading Electronically

A growing trend these days however, is trading stocks electronically, which is done through advanced computerized systems. Unlike the NYSE that generally operates through the manpower of brokers, its counterpart, the National Association of Securities Dealers Automated Quotations (NASDAQ), trades stocks completely through electronic means.

These electronic markets forgo with human stockbrokers and instead make use of advanced computer networks to match buyers and sellers. And through this method, transactions are usually faster and more efficient.

Through electronic trading, investors get many benefits such as being able to get faster confirmations, as well as facilitating control by having online investing readily available through the Internet. However, brokers basically still handle the trades, as investors do not have direct access to the electronic markets.

The process that takes place in both methods however, is usually hidden from investors. Typically, if you are an investor, a call from your broker and regular reports on your stock investments would be provided for you, but you will not really get to see what is happening behind the scenes.

Through the investments that individuals make, many businesses are kept afloat and running. And in exchange for this, investors get a fair share of earnings. Stock trading may be a complex process, but at the end of the day, many people basically benefit from all of it. As a result, the whole concept becomes simple.

16. Insider Trading

This is anyone who is considered to have an inside knowledge of the company, and also has money invested in company stock. This could be someone who owns 10% or more of the company, a director, CEO, CFO, etc. Watching when the insiders buy and sell stock, and at the prices they do it, can be very useful in predicting a stocks future. You don’t want to buy a large stake in Company X when all the people running it are getting out. Therefore it’s always a good idea to watch what the “smart money” is doing.

17. P/E Ratio

The price to earnings ratio can also be a useful tool in evaluating a company. The P/E ratio will tell you if the company is relatively undervalued, or overvalued. A company that is undervalued should have a P/E ratio that is lower than other stocks in their sector. This is a great value to plug into a stock screener to find profitable companies.

Note: P/E can be manipulated (think Enron). Also P/E ratios vary wildly depending on the sector you are looking in. Technology stocks could have an average P/E ratio of 60, while oil companies could have an average P/E ratio of 10. Whenever I evaluate a stock, I don’t look at the P/E against all other companies, but I look at it against their competitors in the same sector.

18. Technical Analysis and Charts

This is another tool that can help you see where a company has been, where the company stands now, and where it’s headed in the future. It shows the company in a graphical form where you can see the stocks activity and volume over a period of time. You can find many tutorials on the internet about this, and you can even get a free DVD that shows you the basics from http://www.technitrader.com.

19. Management Team

Some people just look at earnings, charts, and other technical ways of evaluating a company. This isn’t always a bad thing but to really know about a company, you should know the management. You should know what other companies they have been involved with in the past, and how they did when they were there. You should also know where they plan to take the company you’re evaluating, and in what length of time they have allocated to get there. It’s a bit like evaluating a sports team. You wouldn’t pick a championship team without looking at the coaching staff.

These are a few of the ways to help find companies to invest in. Like with anything though, due your homework, write out your goals, and when in doubt, ask for advice from someone who has already accomplished what you are trying to do. Knowledge is the key to being successful at just about anything.

20. Dividend Yield

A dividend yield in stock trading is the annual dividend payments by a company divided by the market cap of the company, which is the dividend per share divided by the price per share of stock for that company. This number is often expressed as a percentage. There are two types of dividend yield, those on preferred stock and those on common stock.

21. Preferred Share Dividend Yields

Preferred share dividend yields are given to owners of preferred stock, or shares. Dividend payments are stipulated by the prospectus. Preferred share owners calculate multiple yields which reflect the possible outcomes over the security life. The yield that is stated by the company may be different than the yields calculated by the investor.

22. Common Stock Dividend Yields

Common stock dividend yields are different. With common stock, there is no stated dividend. Management of a company sets the dividends that are paid to owners of common shares, and these are usually in relation to the earnings of the company for that time period. Dividends are not guaranteed at a set rate, or even at all. Some dividend payments may be large, and others may be nonexistent. To calculate the dividend yield for common shares, the current yield is a better figure to use than future yield, which are not completely accurate. The current divident yield is gotten by taking the most recent full year dividend and dividing it by the current share price for that stock.

Dividend yields in stock trading refer to the amount of dividends for the past year divided by the price per share of the stock. Preferred stock offers better dividend yields and a guarantee that dividends will be paid. Common stock has no such guarantee. With common stocks, the dividends paid may vary if they are paid at all. Some companies and traders may try to accurately predict future dividends and the future dividend yield. This is not a smart move for most investors, as the stock market is basically unpredictable. By trying to predict future dividends, you could be setting yourself up for a loss if the market conditions change from what you thought they were going to be. Dividend yields are important financial tools that are used by investors in the stock market to help them invest in stocks that have a big potential for gains. Dividend yields are just one of the many analysis tools used by traders to minimize the risks when trading on the stock market.

23. Economic Fundamentals

The economic fundamentals of a company is the most direct influence on the stock market. If a company has rising revenue and profits, then usually the price of the stock will start to rise as well. If a company files for bankruptcy because of falling revenue and profits, the stock for that company will usually fall as well. There are many factors in this category that will influence the stock of a company as well as the stock market. These include takeovers, increased debt, an acquisition that is a poor choice, and many more factors. Any of these factors can cause a rise or drop in the value of stock for that company, and influence the market. Any changes to a company will directly impact the stock for that company as well as the whole market.

24. Sector Changes

Sector changes can have a large influence on the market. If the sector of a stock changes, this can mean a profit or a loss concerning the price of a stock. Certain industries and sectors run in cycles, and this can affect the value of the stock as well as the stock market. Sometimes whole sectors of the stock market may be hot, and other times whole sectors may crash and burn. When this happens, all of the stocks for that sector or industry could be affected, which has a definite influence on the market.

25. Market Swings

Market swings have a large influence on the market and on stock prices. The only certainty concerning the stock market is that it will go up and down. Sometimes these swings may carry specific stocks or sectors with it, and sometimes the don’t. This means that your stock could go down or up for no other reason then that the market is down or up.

26. Stock Market Quotes

Many people are afraid to start investing in stocks because there seems to be so much that they will need to learn first, and it’s true that investing in the stock market isn’t for everyone. But if you’re thinking about doing it one thing you will need to do is to learn to read stock market quotes. It’s not really as hard as it may seem.

Here is a breakdown of what the average quotes will have on them:

27. Price

This will tell you the most current price that stock was traded at.

28. Bid

This is the current price you would get for a stock if you were to sell it.

29. Ask

This is the lowest price a particular stock is currently selling for. The difference amount between the ask and the bid price is called the spread. The ask is generally the price you would pay to buy the stock.

30. Close

Also known as ‘previous close’ or ‘closing price’ this amount is the price the stock was sold at when trading ended the day before.

31. Change

The amount of change in the price the stock sold for between the previous close and the last trade.

32. Open

This will tell you what amount the stock trades for the first time it is sold on that particular day.

33. Day’s Range

This is the difference between the lowest and highest prices that a certain stock has been sold for during one trading day.

34. Yearly Range

This will tell you the highest and lowest amounts that a stock has been traded for in the last year. It can also be called ’52 week range’.

35. Volume

This is how many shares of a particular stock were traded during one day.

36. Average Volume

This is how many shares traded on one days worth of trading that has been averaged out.

37. Market Cap

This is the value of the outstanding shares of a company.

38. Dividend

This number will tell you the amount of money that has been paid in dividends for the last year. While this doesn’t mean that shareholders will continue to make this amount, it’s generally not a popular idea for companies to cut dividends.

39. Dividend Yield

This number will divide the amount of the dividend by the stock price to let shareholders know what they can expect to make in the unlikely event that the dividend and the stocks price stay at the same level for next year.

40. Earnings Per Share or EPS

This will let shareholders know how much profit the company has made in the preceding year.

41. Price / Earnings Ratio

This number will tell you the ratio of the price of the companies stocks to the EPS.

42. Avoid Hot Stocks

This is laughable in the investment world, but novice investors are constantly attracted to the hot stocks. Unfortunately, all the big money has been made before the stock became hot.

43. Cash Flow

The brokers do not worry about the news, politics, or business plans and propaganda of companies. Instead, they look at the balance sheets. Avoid any company that carries a high debt, even if it is in overdrafts and open ended loans.

A company with little debt is capable of losing a massive amount of sales, go through a restructuring, and step back into the market, without loosing stock value.

44. Avoid Speculation

Long shots are called ‘long shots’ because they almost always miss the mark. If someone walks around telling people about the next biggest boom, then experienced investors wonder how much of a ‘cut’ the sales person is getting.

No company can make a simple change, merger, or restructuring, and then have their stocks shoot up overnight. Seeing stocks head down 80% overnight is quite common, but up? Almost never.

45. Follow the Gurus

While it is not necessary to follow the crowd, it is important to follow the gurus. Fool.com is one of the world’s most popular investor’s website. While no guru can get it right, most of the time, learning from the gurus can help novice investors stack the odds in their favour.

Avoiding controversial stocks and dark horses is a commandment for most guru investors.

Warren Buffett, who wrote in his 1989 annual letter:

“Easy does it. After 25 years of buying and supervising a great variety of businesses, Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them. To the extent we have been successful, it is because we concentrated on identifying one-foot hurdles that we could step over rather than because we acquired any ability to clear seven-footers. The finding may seem unfair, but in both business and investments it is usually far more profitable to simply stick with the easy and obvious than it is to resolve the difficult.”

46. Long Term Investing

Most new investors watch their stocks float daily. Many investors destroy their opportunities by trading too much. Stocks should be treated like a business.

The daily price of the stock is unimportant. What is important is whether the company will make more money than last year, reduce their debts, and capture a larger segment of the market.

47. US Stock Market

There are many different stock markets in the US. In most circumstances, the main markets that you will hear of are the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) and the NASDAQ.

The markets are basically where people and companies trade securities. The market is the arena in which the players gather to trade.

48. New York Stock Exchange

The New York Stock Exchange has been around since 1792. It is located on Wall Street in New York City. The NYSE is the largest and best-known stock exchange in the country. It also has very stringent requirements for companies to join its listings. A company must be financially strong and show signs of being an industry leader to join the NYSE. Companies strive to belong to this market, and even pay annual fees for membership.

When a brokerage describes itself as a member of the NYSE it means that the firm has bought a seat on the floor of the NYSE. This means that there is actually a employee on the floor of the exchange buying and selling stock. This is an expensive investment for a firm, costing well over a million dollars.

49. American Stock Exchange

The American Stock Exchange is similar to the NYSE in that it conducts its trading on a trading floor. The floor is filled with traders who buy and sell securities. The AMEX has been located in Manhattan since 1921. It is known as a major exchange for not only stocks, but also options. You will tend to find slightly riskier and smaller stocks listed on the AMEX, which operates under the NASDAQ-AMEX Market Group, a subsidiary of the National Association of Security Dealers.

50. NASDAQ

NASDAQ, or the National Association of Securities Dealers Automated Quotations, is the youngest of the three major markets. It may also be the one you have heard the most about through the news. It lists just about every stock in the industry, but it is best known for listing technology companies. In fact, it is where you will find many major technology stocks, including Microsoft and Intel. It was launched in 1971 and was the first over-the-counter stock market. It links buyers and sellers via a computer network.

Brokers and dealers will market the stocks by maintaning an inventory in their own accounts. They will buy or sell when they receive an order from an investor. You will find that start up companies that are issuing stock in an initial public offering will often list on the NASDAQ.

When it comes to buying stock, knowing where to find certain types of stock is important. Each market often specializes in slightly different types of stocks.

51. Stay with the Trend

One of the proven strategies in online stock market trading is being consistent with the general trend. Over the years, stock market trading has reached a value of its own, which can and should be taken into consideration when making an investment. Going with the trend thus is usually a surefire strategy, all the more as you can take advantage of finding all types of instructive materials on the matter. By constantly observing the performance of the online stock market trading you will notice the performance of key companies. Moreover, sticking to the trend is a quite comfortable and easy to follow option, as the great majority of investment companies offer their virtual investors reports and descriptions to help them make profitable choices.

52. Choose your Tips Wisely

If you do decide, however, that you want to follow a “hot” suggestion, make sure it comes from someone who is trustworthy and reliable. You must be careful, shrewd and wise if you want to act in a risky direction. This means that you are supposed to give instant trust to a “good old pal” who out of the blue gives you a great tip. If you want to succeed in online stock market trading, you must be well educated enough to do your own research when it comes to targeting the tip you were offered or otherwise request the advice of a stockbroker.

53. Ask for Professional Help

This is one of the wisest stratagems you can use. Stockbrokers working in online stock market trading are usually certified and skilled in their field, so that you can easily take advantage of your capital investing by employing them. However, their expertise is rarely, if ever, free of charge. Basically, the brokers’ involvement in stock market trading is only for their clients, so making use of their full comprehension to bring them profit does come at a price. If you don’t find the commission appropriate, though, there are plenty of other possibilities to choose from, especially as you get more experienced and able to supervise your own transactions.

54. Unstable Earnings

One red flag to pay attention to is unstable earnings. If a company’s earnings and growth are volatile, you can expect the company’s stock to follow suit. Large expansions, company restructuring, and other large expenses can temporarily set back a company’s earnings, but a company’s general picture should show that the company is consistently growing and pulling a profit. In fact focus solely on stocks with super earnings growth. this is what the big funds love and when they buy in they wil lcreate the trnds for us to profit in. With so many choices there’s no point in leaving your money in B stocks whn there is great money to be made in A+ stocks.

55. Debt Amount

Another red flag is a company that is heavily in debt. While many companies enjoy the benefits of leveraging debt to expand the business, but a company carrying too much debt becomes a financial risk. Just as a financial institution wouldn’t want to extend a loan to a company who’s heavily in debt, you shouldn’t invest your money for the same reasons.

56. Stock Market Crash

There is no doubt that a bad economy can take its toll on people. While we may not be at our lowest point, most of us are feeling the effects of our struggling economy in one way or another. At least, for now, the stock market seems to be running full steam ahead. There have been times in the past when the stock market has crashed, and that leads to devastating loss on both a personal and national scale. But, how does a stock market crash occur?

Before we can answer that we need to look at the definition of what a crash is. What may surprise you is that there is no specific definition that all economists agree on. However, the general definition of a stock market crash is when there is a double digit percentage loss across the market. This loss takes place in only a few days, as opposed to the several months or years associated with the typical bear market.

Most people assume that the answer to “how does the stock market crash occur” is based on actual events. There is some truth to this, and it certainly can be a factor that leads to a crash, but there have been enough examples of bad events happening with no resultant crash, that it is clear there is something more going on.

The driving factor in most stock market crashes is panic. This panic may be caused, in part, by some event, but more often than not there is no logical basis for it. For whatever reason, a few investors get skittish, and start selling on a large portion of stock at a reduced price. Then other investors take notice, and they to start selling; thinking that there is an actual event driving this selloff at lower prices. Once this selling off that’s the mainstream investors, a crash ensues.

What we’re really looking at here, isn’t anything based on logic. Instead, it’s an economic Domino effect. Again, it’s always possible that there is some event that causes the initial selloff by the few investors, but that’s not enough to explain the overall crash. For example, let’s say there is a skirmish in a Middle Eastern country that is a large supplier of the world’s oil. A few investors get nervous about some of their holdings, and decide it’s better to sell at a loss now than to risk an even greater loss in the future. However there is no real way for them to know which way any particular stock is going to go, and yet they believe they are taking an educated risk.

Then, as other investors get wind of this mini-selloff they decide to start selling their stocks because they now perceived a real problem; even though there really isn’t one. And that’s the basic answer to how does a stock market crash occur.

57. Scams and Spams in Stock Market

Junk email, spam, is getting worse than ever. Even with an anti-spam filter, some junk emails that show up in the inbox are disgusting, deceptive, and aimed to con you out of your money. In addition to traditional spam emails promoting medication, mortgage, pornography, new ones such as stock scams are growing. The deceptive and unsolicited nature of these e-mails qualifies them as spam.

Stock scams, combined with traditional spam techniques, can cause a significant financial loss to victims of these swindles.

You might have noticed that many spams are touting a particular stock. These touts are sometimes made as part of a Pump and Dump scheme. Pump-and-dump scams are email campaigns which encourage people to invest in a particular company’s stock, in order to quickly inflate its value and enable the spammers to make a fast profit. It is thought that these scams take place unbeknown to the company involved. The purpose of the pump-and-dump stock spam is to quickly and cheaply disperse false information about a company’s stock, along with information obtained from recent press releases, to potential investors. Usually this is a slimly traded stock on a small exchange for only pennies a share.

By implying that recipients of spam emails are in possession of privileged information – such as news of an acquisition before a general announcement – spammers seek to persuade the gullible into purchasing particular stocks. If a significant enough number of easily-led individuals invest in the touted stock, a spammer can ramp up the share price so that existing shareholders can sell their shares at a profit. But when the fraudsters dump their shares, and then stop advertising the stock, the price often falls, and investors ultimately lose their cash.

What to do if you get spammed? How not to become a victim of stock scams?

The first thing you can to protect yourself against stock scams on the Internet and against spam on the whole is to setup an anti-spam filter, which will filter your messages before you receive them into your inbox. Most pump-and-dump spam emails contain the words like “stock”, “invest”, “investor reports”. But to bypass spam filters, spammers can use the variations of the word “stock” such as “st0ck” or “stox”. So, if your inbox is flooded with penny stock tip, ignore it. Delete it. Do not believe anyone who tells you, “Invest quickly or you will miss out on a once-in-a lifetime opportunity.” Just don’t go thinking this is your big chance to hit pay-dirt. It is sounds too good to be true. The only ones profiting from these “spam e-mail tips” are the senders themselves – in this case spammers.

The history of the stock market has shown that the best and most trusted way to build wealth is to invest in high-quality businesses with excellent growth opportunites.

Investigate before you invest. Find out who sent the message to you. Ask whether the claims can be documented. Verify whether the claims are true before you send a nickel of your money.

But if you yielded to temptation and became a victim pf a stock scam, you can hire a lawyer to try to get your money back, but you need to know that recovery is rare. Just remember that the best protection is to take no action and stay away from bad deals in the first place.

58. Scalping

Scalping is a term used for a method where trades are opened and closed within a very short time scale, perhaps anything from a second or two to a few minutes. This is a day trading method where Scalpers make several, perhaps hundreds of trades a day, accruing small profits intraday for an overall daily return.

59. Momentum Trading

Momentum trading is another day trading method where the trader sees an acceleration in a stock’s price, earnings, or revenues and takes a long or short position in the stock with the hope that its momentum will continue in either an upwards or downwards direction. Once momentum slows down or falls, the trade is exited. The holding period is commonly from a few hours up to a whole day.

60. Swing Trading

Swing Trading is a style of trading that attempts to capture gains in a stock within one to four days. This is mainly used by private, at home traders. The individual trader is able to exploit the short-term stock movements without the competition of major traders. Swing traders use technical analysis to look for stocks with short-term price momentum. These traders aren’t interested in the fundamental or intrinsic value of stocks but rather in their price trends and patterns.

61. Trend Trading

Trend Trading is a trading strategy where traders commonly hold their positions for up to a month. It is a trading strategy that attempts to capture gains through the analysis of an asset’s momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in a down trend (successively lower highs).

Conclusion

Stock investing is not like trading Baseball cards, and should not be treated as suck. Avoid spam that promises quick profits, secrets to wealth, and insider tricks. Instead, follow the patterns used by real stock brokers.