Trading in the stock market has continued to become so viable because of the fact that this is literally the field that doesn’t sleep. The reason behind this is that when it comes to trading stocks, the transactions of services and businesses are being held 24/7 in a fast and reliable system and approaches.
Before one thinks of trading in stock market, it would be best if you understand that not all people are fit for this industry. Accepting that not all people can indulge into it without proper credentials and experience on the finance industry and in the stock market, would pave the way for success since you would not be complacent.
To be prepared, it would also pay to get information through research—which could either be online or by reading reference materials such as business magazines and books. You can also get additional knowledge if you ask people who have tried their luck in stock trading and get first-hand tips from their experience. If you want to get exposure, you can experience the thrill and the excitement of stock trading by visiting the stock market and observe how it works as well as how people inside handle it.
What matters most
Many experts say that knowing all the basics in trading and in the stock market are very important because these keep you up to date with everything that is going on.
But, if you really want to be successful in this field, it is a must that you know the common pitfalls that have been committed by most stock traders. By knowing what these mistakes are, you can avoid them and can even develop various strategies to complement various unavoidable circumstances.
The following are the most common mistakes most trading neophytes—and even those in the business for a short span of time—commit. Make sure that you memorize them by heart to avoid committing and repeating the same mistakes.
If you are new into stock trading, you must know that:
- the records that trading stock market can create are not reliable at all times. Many first time traders believe that the records that trading robots create are trusted so they don’t do back research. If you want to be notches higher, do not always rely on these reports because chances are, these are manipulated or made up with no actual basis.
- the money can be made through day trading or scalping. This is also another big bluff in the stock trading industry because simulations are used to promote and create transactions that are not based on actual statistics. Don’t rely on the voices that you hear—either online or in the stock trading market—because these only aim to lure you into transactions that don’t guarantee anything.
- many would rely on the short-term goals in trading in the stock market not knowing that this doesn’t guarantee success in the future. For many, this is because short terms can be random and fluctuates easily, thus, not ensuring anything on your transactions in the coming years.
Traditionally, stock market transactions are done in trading houses generally called stock exchanges. These are the places where buyers and sellers of stocks meet and do business on expansive trading floors.
The original intent of a stock market is to facilitate trading between buyers and sellers in one place to reduce risks. Simply put, the stock market is nothing more than a sophisticated farmer’s market of buyers and sellers doing their business.
Traditional exchange floors
Like any other market place, people in these sites could become agitated and noisy and just plain excited with the prospects of earning money.
Sometimes, you can see glimpses of these transactions in news reports – traders talking on two-way radios or telephones, waving and yelling, and furiously sending signals with the other traders on the floor.
Virtual stock exchanges
Lately, with the advent of the computer and the development of the internet, another type of stock market exchanges came into existence. These are the virtual stock market exchanges, usually a network connected by computers where the trading is transacted electronically.
Market types
The stock market has two distinct types of market – the primary and the secondary market.
The primary market is the place where securities are created by means of IPO (initial public offering). The secondary market is where investors trade previously-issued stocks without the participation of the issuing owner-companies.
This is the market we all know (and see) today at the stock market exchange floors. (In the stock market business, the company need not take part in the trading of its stocks.)
NYSE
The New York Stock Exchange is the most prestigious in the world. It was founded more than 200 years ago in New York City by the original 24 stockbrokers and merchants.
With companies like Wal-Mart, General Electric, Coca-cola, McDonald’s, Citigroup, and Gillette among others in its rosters, the NYSE is the market of choice for the biggest U.S. companies.
Traditional trading
In NYSE, the first type of exchange was done on the trading floor on a man-to-man basis. From the brokerage firms, orders go down to the brokers who transact business at the trading post where buyers and sellers are matched.
The prices are determined using the auction method – the current price is the highest amount the buyer is willing to pay, and the lowest price someone is selling. As soon as a trade is completed, the deal is sent to the investor who placed the order via the broker.
NASDAQ
The new and 2nd type of exchange is the virtual kind called an over-the-counter (OTC) market, led by the very popular NASDAQ. These markets do not own central locations or floor brokers. Trading is completed through a computer-and-telecommunications network of dealers.
The tech boom of the 90s made NASDAQ a serious NYSE competitor today. Now, the NASDAQ is home to many of the largest technology companies (Microsoft, Oracle, Cisco, Dell, Intel and others).
Other exchanges
All the major cities and business hubs around the world have their own exchanges and trading houses. Some are still doing traditional man-to-man transactions while others are into the modern high-tech models of selling and buying stocks.
Whatever trading models are used (traditional or high-tech), the stock market is here to stay.
This website uses cookies that are necessary to its functioning and required to achieve the purposes illustrated in the privacy policy. By accepting this OR scrolling this page OR continuing to browse, you agree to our Privacy Policy