Trading stocks for a living

Stocks are shares in a stock company. Add 51 % of the shares in a corporation, you also own 51 % of the company.

A company can be divided into many or few shares. For example, some companies are divided into only a handful of stocks, while other companies are split into several million shares.

How much is a stock worth?

The value of a share is determined on the basis of the company. If the company is worth $ 100 million, and there are 100 stocks, is a stock worth $ 1 million. If the company is only divided into two shares, each share in this company worth 50 million.

What affects the share price movements?

The Share price - ie the value of a share - is not stable, but varies in line with the company's value. Or more correctly - it is the market's assessment of the company's value that affects the stock price.

There can be many reasons why a stock price goes up or down in value. If the company gets a new contract of great value, will often share price go up, but not always : Maybe the market was told that the contract would be more evrdt than the final outcome - and in this case is like the stock price down.

Share price is thus going up and down as a result of circumstances affecting the company. It applies not only to direct issues surrounding the company but also external factors. The stock exchange in whole, to influence the share price. How it goes with the economy are also relevant to the share price.

Corporations and ecosystems

No corporation is a lonely island, but they are in the near or distant linked to any other companies. World stock markets are in a way the Earth 's ecosystem.

In nature, for example, a volcanic eruption affect ecosystems worldwide. The event is local (eruption), but the repercussions are global.

World financial markets are also affected by local, national and global conditions. A local event, such as a bankruptcy of one company can create global effects of the stock market, foreign exchange, commodity and other financial markets.

Since no one can predict the future, it is impossible to predict with certainty what tomorrow's share will be. However, we can analyze the market, make forecasts and probable scenarios.

In stock trading, there are three ways to analyze market :

• Fundamental analysis - how one looks at the underlying circumstances of the company itself and the market as a whole.
• Sentiment analysis - where one studies the psychological state of the market in the form of polls and similar methods.
• Technical analysis - where one studies the movement history (the past) to predict future price performance.

Technical Analysis

Many people choose to use only only technical analysis, and ignores all other information in the market. The attitude is that the course history reflects the psychologist in the market.

Some believe that fundamental analysis is better, because when you look at the facts. There are arguments for and against all financial analysis, but technical analysis is one of the most popular tools we have in stock trading.

Many in technical analysis driver called Daytrading, and is only intraday. Others are long-term exposure in the stock market. Then there those who do both.

It amazes me how stupid some traders are. Most traders will not be for very long. Some take too much risk in terms of expertise and disappear from the market in a short time. Others cling to their shares even though the company is clearly moving in the direction gravelling or bankruptcy.