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How to Trade Shares – How Stock Market Works

Updated on March 14, 2012

A stock is nothing in as long as its not making money to you

 

When I first started trading stocks, I thought that I knew how to predict the next price movement. I was wrong time and again. It seems all I did know was that stocks went up and down. I had to look for information that I felt I was missing. The information was plenty and apparently it seemed I was the only person who did not have his own first-hand stock market in­formation. The more I searched for this first hand secret information, the more I became a clueless operator who plunged repeatedly in and out of the stock market with losses. I bought stock in all types of companies. What these companies did or where they came from I had no idea. In some of these stocks I bought I developed a special liking for them like pets. This came about for different reasons. Sometimes it was because I liked their trade names or because I had started by making money with them. This led me to prefer these stocks more than others, and before I knew what I was doing I had started to keep pets. I thought of them as something belonging to me, like members of my family. I praised their virtues day and night. I talked about them as one talks about his children. It did not bother me that no one else could see any special virtue in my pet stocks to distinguish them from any other stocks. This state of mind lasted until I realized that my pet stocks were causing me my heaviest losses. The Truth is, a stock is nothing in as long as its not making money to you. Throw it to the dogs.

Stock Market is a Seesaw

Free Stock Market Trading Tips and Advice

I provide these Free Stock Market Trading Tips and Advice to help beginners and average traders who might be inexperienced in the complexity of stock market movements make money in the stock market. I analyse Nasdaq Composite Index, SP500, Dow, Russell 3000 and NYSE as I trade. I prefer trading Exchange Traded Funds because they spread risks across other stocks, pay dividends, are less noisy, not very prone to rumors and or manipulations, their Options are spread at workable intervals for spread strategies, and above all, ETFs trades are easily predictable by using the broad market indices of Nasdaq, SP500, Dow, Russell 3000 and NYSE.

How does the Stock Market Work?

 

But seriously though, how then does the stock market work? The truth is that the stock market is a seesaw. At any one particular period, it can either go up or down and it continues in that state until it tells you it has stopped doing so. It's the stock market to tell you what its doing and not you to imagine what it should do. You can repeat this until breakfast tomorrow because if you think otherwise, then you will be in a lot of problems.

Like in a seesaw, the stock market moves in a price path of uptrend and downtrend which are governed by complex dynamics of news, economic growth reports, manipulation, fear and greed. When the uptrend has won in the seesaw, the market will continue being bullish until cumulative market dynamics are provided in sufficient quantity for the supply and demand to go past the equilibrium line of seesaw, otherwise the market will continue with the uptrend. The opposite is also true of the downtrend.

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    • profile image

      Mika 

      6 years ago

      Below is the first page of my small unique book "The small stock trader":

      Successful stock trading requires almost the same traits as most other creative and competitive endeavors. Stock trading is not about having a high IQ, an MBA, numerical or software skills, macroeconomics knowledge, or some magic technical indicators. It is more about managing your stock trading plan, mind, and capital with an efficient use of your little time, money, and abilities/skills. Even 300 Spartans cannot beat you if you have the following:

      • Passion

      • Understanding of psychology

      • Focus

      • Hard work

      • Unique stock trading plan

      • Independent thinking

      • Zen-like simplicity

      • Open-minded flexibility

      • Patience and timing

      • Discipline

      • Risk management

      • A little luck

      If you look carefully at these items, you will also notice that a successful small stock trader is more of a personality and practice than just some technical knowledge. However, even if you have all of the above traits, humility is also important. Do not allow your ego get overconfident, as anything can happen in the stock market. As in poker, in relationships, or in life, you may follow all the rules and do all the right things but still lose some battles. Nevertheless, you can still win the war if you have the above-mentioned traits. Furthermore, there are also a few more items that we could add to the above list, such as having a super self-knowledge and selfesteem, knowing and respecting the other players, secrecy, knowing what you want and never giving up as you strive to achieve it, focus on a single activity/market without multitasking, creativity, an analytical mind to calculate the risks and probabilities, taking a few parts of the best strategies, learning from your mistakes and from a few best players, honesty, good observational skills and intuition to act quickly, confident courage to take well-calculated risks, Zen-like inner peace and continuous self-improvement, being a unique individual, and eventually efficiently using your little time, money and abilities/skills.

      I hope the above page of my small book was a little helpful!

      Mika (author of "The small stock trader")

    • Storytellersrus profile image

      Barbara 

      10 years ago from Stepping past clutter

      I bought my first stock when I met a cute guy back in graduate school. His family oil company's stock never went to $1, as he'd predicted. But I earned a hundred times my investment by marrying the guy. LOL!

      Great hub, as always, ngureco! Buy what you know!

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