Tips For the Stock Market

The stock market can be a tricky place. With so many options and possibilities, it is very easy to find yourself completely overwhelmed from time to time. It is very frustrating to see people that seem to have no problem investing confidently and always seem to make a profit, while we struggle to make a penny! Well, don’t worry, I am going to share with you some tips for the stock market. These following tips should give you a small edge you can use to finally start seeing some gain in this game we call the stock market.

Trading Based on Trends

I had always looked for something that might give me a little insight to the future of a stocks price. I eventually discovered how to invest based on trends. This was a turning point for me that really helped me start making some money instead of losing it. The process is basically looking at the past history of a stock price. I look for and trends in the graph. Sometimes you will find a company that has a very regular stock price. By regular, I mean a price that follow a certain pattern. You can use this pattern to invest at the best possible time. As, far tips for the stock market, I would say this one is most important. It was when I started implementing this strategy that I say my first profits start to happen.

Watch Out!

Something to watch out for when investing on trends is major events. You want to make sure that the trend was not created based on large events. For example, a stock might jump up from time to time but I is actually the result of a few big deals the company took part in. This is not a company you want to invest in. These events are purely chance and chance is not good to risk your money on!

Play it Smart

Another thing I have found to be very helpful in stock investing is, no matter how amazing a stock seems, play the game conservatively. If you think a stock a small chance of having a big gain and another has a good chance of having a small gain, always go with the small gain. Sure, you might not become a millionaire overnight like this, but you will gain valuable investing while still making some nice change!

Stock Market Investing – Navigating the Bull and Bear Markets

Stock market trends are generally described using one of two colloquial terms: the Bull Market and the Bear Market. The market shifts back and forth between these two market conditions.

A bear market is a phrase that represents the general downturn of the market, or lowering stock prices. On the other hand, the bull market is just the opposite – the positive growth of the market’s stock prices.

Individual stocks with increasing value are known as bullish stocks, while those experiencing a decrease are called bearish stocks.

Indicators of Bear and Bull Stocks

You cannot accurately classify the stock market trend simply on the basis of short-term data. Determinations of bull or bear markets rely on the overall trend of stock prices over months of time.

For example, there will inevitably be temporary ups in a bear market and temporary downs in a bull market. So the stock market fluctuates daily, but it is more important to assess its longer-term overall trend.

Economic Indicators of the Market

The stock market tends to mirror the overall state of the economy, having a number of similarities with the overall economy.

A bull or bullish economy tends to have moderate interest rates and a low unemployment rate. Confidence in the stock market is high, and the performance of stocks on average either lean toward or are strongly positive.

In times where the economy is undergoing an economic depression, we see high rates of unemployment and a number of poor economic indicators. In such an economy, investors tend to lose confidence in the market, and may sell their stocks in large amounts.

Extreme bear or bull markets are not good for the stock market, with either extreme generating its own set of concerns. A high bear market can exacerbate economic problems as investors rush to dump their stocks quickly to minimize their losses.

Strong bull markets lead to a “bubble” of stock wealth built due to over-confidence of investors. Eventually this bubble bursts, causing major problems to the performance of stocks. When such bubbles burst, companies die.

The Bull Market

Bull markets draw investors who to want to purchase stocks. The performance of the economy and the stock market tends to be shifting positively, making it a good time to invest for most investors – if they invest early enough.

Investors tend to have more money during the economic conditions of a bull market. However, the increased demand and shortage of supply for stocks can cause the stock prices to become inflated, or over-valued.

It can be easier to earn a profit in a bull market because the trend of the economy is shifting upward and everyone knows. But eventually the economy and the stock market experience another downturn in its cycle of ups and downs.

For investors, the profitability key comes in accurately determining the transition point where the market begins to fall and then take at least some of your profits by selling a portion of your stocks before being negatively impacted by the downturn.

The Bear Market

The bear market can be extremely difficult to navigate, especially for a novice investor. Investors here use a number of special investment strategies to try to make the best of a bad situation.

One of these techniques is called “short selling,” which is the selling of stocks as you anticipate its price will continue to decline. Then the investor can buy the stocks back for an even lower price.

Other investors decide to focus only on investing in more stable stocks such as government owned utility companies because they are less risky.

STOP Losing Money in the Stock Market With This Handy Stock Market Tip

Are you sick and tired of losing money in the stock market? Keep reading because in this article I am going to give you a stock market tip that will help you to pout a stop to this.

This stock market tip is called, “hedging” and is a practice that every investor should know about. The best way to understand hedging is to think about it as insurance. When people hedge they are insuring themselves against a negative event. Hedging does not stop negative events from happening but it does lessen their impact.

Hedging against investment risks means strategically using instruments in the market to offset the risk of adverse price movements. In simpler terms investors hedge one investment by making another.

To hedge you would invest in two securities with negative correlations. Take note that hedging will affect your risk return trade off. A reduction in your risk will always mean a reduction in your profits, thus hedging is not a technique that you can use to make profits instead it is used to reduce potential loss.

How to hedge

Hedging techniques involve the use of complicated financial instruments know as derivatives, the two most common ones being options and futures. Here is an example of how it works, lets say you own shares of Xyz Company and want to protect yourself against potential losses. To do this you can buy a put option on the company, this gives you the right to sell your stock at a specific price.

This strategy is known as a married put. If the stock price goes beneath the strike price the losses will be offset by gains in the put option. There are many different hedging techniques but this is the simplest.

For all its benefits this stock market tip has its downsides, every hedge has it’s costs so decide before hand if the benefits out weight the costs. Remember that the goal of hedging isn’t to make money but to protect against losses, also hedging is not a perfect science and things can go wrong.