The stock market can be extremely intimidating and even scary for some potential investors. Depending on the current stock trends, you may hear terms such as “bear” or “bull” to describe the market. These terms may sound angry and aggressive to those brand new to the market, and could simply make them turn away to search for other investment opportunities. The truth is, the stock market has the ability to turn small time investors into wealthy individuals if the right choices are made. Making those choices, however, is the challenge.
What is the Stock Market?
Also known as an equity market, the stock market is a way for companies to earn additional capital by trading shares in their corporation to other firms and individuals. This doesn’t change the company, rather it allows them to expand into new markets and grow into a more profitable entity – at least in theory. Some companies may sell shares prematurely and never expand or become more profitable, while others could reach their growth peak before deciding to sell shares, and then could start to become hidden behind their competition. Knowing which companies to invest in, and when, is why many people view the stock market as a gamble.
How can Analyzing Past Trends Help?
Since no one can see the future and know exactly which companies will skyrocket and which will fall, there are various strategies in place to help make educated guesses on where to invest your money. Stock market technical analysis is one of the most commonly used methods for long-term investing. By looking at trends in a certain company over the past few years, you may notice their stock value rise for a short time during one month every year but then rapidly drops afterwards. By seeing this trend, you may decide it’s wise to purchase stocks just after they drop and hold them over until the next year when the prices rise again.
Do I Need a Broker?
Normally, yes. However, you might not want a full service broker. Some will offer trading advice and tell you when and what to sell, while others will simply serve as a middle ground to bring buyers and sellers together without offering any advice. Depending on your trading goals, you may want to make all of the decisions with your portfolio yourself, or you could simply want to make the investment but allow others to make the tough decisions for you.
