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First of all, I would like to welcome you to the start of a most fascinating and interesting journey – that of becoming a successful trader in the stock market. For me, becoming a trader has been one of the most exciting journeys I have ever undertaken, and I hope it proves to be as rewarding and fulfilling for you.
What is Stock?
When a company wishes to raise capital, one of the ways it can do this is to issue stock. This is a particularly good method of raising funds, because it generates the required money without creating debt in the same way that borrowing does. It is excellent for the company and it is excellent for people like you, for you will then have an opportunity to trade the firm’s stock and make a tidy profit.
When an investor purchases stock in a company, he becomes a shareholder or a partial owner of that firm. An investor generally buys stock in the hope that a specific company will be successful and reward its shareholders with dividends, which are essentially portions of the firm’s profit. A successful company also usually enjoys an increase in the market value of its shares. If an investor is able to sell that stock at a higher price than the one he purchased it at, the result is, of course, a profit.
The day trader’s involvement with stocks is somewhat removed from that of the classic investor. It is not the day trader’s desire to invest per se, but rather to capitalize on the fluctuations in stock price that occur in the markets on a daily basis. As a day trader, you will be concerned with analyzing and profiting from the behaviour of a stock on a given day. You will never be the elderly person with a safety deposit box full of dusty stock certificates that have been appreciating at a snail’s pace for decades.
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