As a general guide to investing: the stock market and investing for beginners is a bit like a riddle. All investors should understand the stock exchange because stock investing is your key to higher investment gains. At the exact same time, investing DIRECTLY in the stock market isn't smart investing for beginners, because it frequently contributes to unnecessary losses. So, here's a basic guide to investing in shares without playing the stock exchange, which means it's possible to make money and ETFs sleep at night.
Regardless of what anybody tells you, the stock market isn't predictable over the brief term. By way of instance, not 1 individual on the face of the earth predicted that in early May of 2010 the U.S. stock market would collapse 999 points inside one trading day. Many people don't even understand what 999 points means. The fantastic news is you don't need to understand the day to day rhetoric of the market to generate money investing in stocks. But you should understand how the stock exchange functions; and how investing for beginners could be simplified.
Stock prices fluctuate based on just 1 thing: buying and selling activity. Every second the sector is open, some individuals are placing BUY orders and many others are putting SELL orders.
If buy orders much outweigh sell orders prices soar; and if sell orders buy orders prices fall as a rock. What prompts investors to purchase or sell? More than anything else, the news events of this day affect investment choices.
By way of instance, there was awful news on debt problems in Europe the day the Dow Jones Average dropped nearly 1000 points before regaining most of the reduction before the market closed. Why the movement was so intense was a bit of a mystery, but one thing is for sure.
Significant market orders swamped purchase orders and prices took a dive. The Dow Jones Average started the afternoon at stock trading about 10,000 (it was a couple of hundred points higher), so a 1000 point move translates into about a 10% drop in stock prices in 1 day. Now, let us move on to our guide to buying novices.