Stock Market Essentials

$18.65

Author(s)

Victor A. Cuadra

Format

PDF

Pages

Published Date

2002

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The stock market can be nerve-wracking to the novice investor. Many of us don’t even know how to place an order, much less understand when to buy and when to sell. This Pocket Essential shows you the basics. By the time you finish, you will understand how the financial markets work, and how to get involved in stock trading. You will learn the history of the stock market, different ways to invest in the stock market, how to open a trading account either online or through a stockbroker, how to place trades once your account is open, and how stocks move and what motivates them to move.

Author’s Note:

The very first truth you need to know about the stock market is that there are no truths in the stock market, other than: if you sell at a higher price than you bought, you will have a very good chance of making a profit. Regardless of what all the experts, books and articles say about any aspect of the investment world, the truth is that it is all just opinions, interpretations of events and theories that try to approximate the reality that is the stock market. This, of course, applies to this book as well.

This book is a guided tour through beginner and intermediate concepts, opinions, interpretations and theories about the stock market. Hopefully, it will give you the background information you need to form your own opinions, interpretations and theories about how it works.

The first myth that needs to be dispelled is the financial holy grail. The myth about a system, strategy or plan that is nearly infallible and gives a foolproof chance of making it in the stock market. Having been involved with the stock market for a number of years, and having worked with many of the top traders, I can say with confidence that there is no such thing as the financial holy grail. There are, though, consistent methodologies that can greatly improve the possibilities of profiting in the stock market in the short, intermediate and long term. All investments, in the stock market or otherwise, have risks, rewards and a possibility of success. You can think of these as three arrows that can’t all point in your favour at the same time. At best, two of the three will be in your favour.

Whatever methods or ideas you choose to trade and invest make sure you are consistent. In the last few decades business management has seen many breakthroughs in process control and improvement. What all of these management theories have in common is that all business processes need to be standardised, documented and measured. This allows you to evaluate the efficiency and effectiveness of the business and monitor the performance of the process into the future, so that potential problems can be detected early and major negative consequences avoided.

Trading is no different to any other business discipline. Before you start trading, you should seriously consider standardising, documenting and measuring the process used to choose, buy and sell your stocks. By doing this, you will have the opportunity to find when and where the performance of your strategies starts to deteriorate. Then you will have the opportunity to fine tune it and solve any potential problems.