As most everyone knows, the stock market is that place “where shares are issued and traded either through exchanges or over-the-counter markets” at an agreed price. These stocks or shares are securities listed on the stock exchange.
The stock market (also known as the equity market) is one of the most important sections of a market economy. It is one of the important sources for companies to raise money for their expansion or capital infusion.
Sometimes, this market is split into two parts – the primary and the secondary market. New issues are first offered at the primary market. The subsequent trading is done at the secondary market.
Question: Where are the animals coming from?
It is said that on Wall Street, the bulls and bears are in a constant struggle. Actually, the animal names are simply nicknames on certain situations and kinds of people in the stock market business.
Bull
When everything in the economy is in tiptop shape, when people have jobs, when the gross domestic product (GDP) is growing and the stocks are rising – it is a bull market.
This is the time when everything is coming up roses in the stock market. This is also the easiest time of the year to pick stocks because everything is going up.
Bull markets cannot last forever, though. Because things were looking good in the bull season of the market, it sometimes can lead to dangerous situations if the stocks become overvalued.
The “bull” connotation had jumped fence and is now into mainstream lingo. If a person is optimistic and believes that stocks will go up, that person is called a bull. His attitude had been called all these years as having a “bullish outlook.”
Bear
The bear is the opposite of the bull. In a bear market, recession is looming and the prices of stocks are falling. Bear markets is a tough time for investors to pick profitable stocks.
Some experienced stock brokers sometimes resort to making money. They would use a technique called “short selling.”
Another strategy is to wait out the bear market on the sidelines, anticipating the return of the bull market. If a person is pessimistic or thinks the stocks are going to drop again, that person is called a “bear”, and is now labeled as having a “bearish outlook”.
Chicken
Chickens are those who are deathly afraid of losing anything. Their fear blankets their need to make profit. Consequently, they would turn only to money-market securities. (Some get out of the market entirely.)
While it is true that one should never invest into something which you will lose sleep, it is also true that you will never see any return if you avoid the market completely and do not take risks.
Pigs
Professional traders love the pigs – it is from their losses that the bulls and the bears collect their profits.
Pigs are those investors who love high risks, and are always looking for that one big score in a short period of time. They buy on hot tips and invest without doing thorough research.
Usually, they are impatient and greedy about their investments. They are usually drawn to high-risk securities without putting time and effort to learn about their investments
Assuming these animals’ characteristics in the stock market, what kind of investor would you be?
If you are one of those who are trying to get his or her luck in the stock market by trading, then the best thing that you could do is to familiarize yourself with the nature of the venture.
It is best if you have already mastered the basics when it comes to stock market and trading so you will know exactly what are you getting into. If you are already armed with the basics, then you could somehow estimate where your involvement in stock trading could take you.
The keys to success
If you are not careful and prepared enough, chances are you are not going to make it in stock market. This is because the industry—being the largest in the world that generates billions of transactions non-stop—takes a lot of knowledge, experience, guts, and decisiveness in order to be successful.
To be able to become successful in the stock market, one must be very wise in dealing with transactions. One must also know where to trade, the peak season for the trading, the techniques to be used, and the updated strategies to generate as many transactions as possible.
Aside from the qualities mentioned, you can survive the world of trading in stock market if you:
- have the ability to decide on the length of the transactions. This is very, very crucial for a trader to ensure that he or she still has a portion of the market that can be penetrated. A successful smart trader should decide first if he or she would go long term or short term on the process. This is a very crucial decision because it will somehow give direction to the transaction and will somehow give a hint, which one will be very successful for you.
- controlling emotions. The biggest problems that majority of the traders in the stock market are having the idea what to expect in the industry. Studies show that the biggest problem that most people in trading stocks experience is dealing with their emotions.
- have enough guts to start big. Although short term stock trading can do a beginner good—by closing transactions in short period of time—it will do them bad in the future because these have no stability. They say that it is better to plot a stock and trade it to ensure that this is where the direction and stability can be seen.
- have the ability to detach from emotional baggage. This is indeed very hard because most of the time—especially in the times of need to generate transactions—traders become anxious that there will be no transaction that will take place within the day. There are also those that let their emotions rule over their rational thinking, which usually leads to incorrect means of dealing with the problem at hand. Although it's human nature to experience certain levels of emotional dilemma, it is best to detach yourself from these if you really want to be successful in the stock market.
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