Make a Wise Investment

The Share market immediately conjuresupstories of fortunes made and lost. A share makes the holdera partial owner of thecompanyand different types of shareshavedifferentrightsassociated with them. If you are able to sell off your shareat a pricehigher than your buying price, you make a profitbut you also run the risk of incurringa loss if the share pricefalls. The business you invested inmakes profit and theyprovide you part of it as dividend.
In the share market you are an anonymous player and many have made a reasonable profit. There is no unique formula to ensureconsistent gain but before you venture into this marketyou should know the basics of stock trading.

What does trading stocks mean?

Buying and selling of stocks is referred to as trading in the financial market.

You have to approach a broker in order to trade. You can trade either electronically or on the exchange floor.Exchange floor scene must be familiar to you;the NYSEhas been on television as part of news coverage innumerable times. It is here that your broker arranges for your shares to be ordered. . The floor clerk locates the floor trader from whom the shares can be bought. Once the price is agreed upon, the deal is finalized.

Electronic transaction isvery common today. It is an efficient and fast method of stock trading. Here too you require a broker but you receive confirmations almost immediately .Inonline investingyour broker will connect to the exchange networkand search for a buyer or seller according to your order.
How are the stock prices determined?
Thestock pricescannot be predicted, they depend on various factors like political unrest, if thereis a huge demandfor a particular share at a given time, prices can fluctuate, any event that could adversely affect the companywill also cause the share prices todrop.

Before you decide onwhich stock to buy you must answer the following questions.

Do youknow the company well enough?
What is the company’s reputation in the market?
Have you gone through their annual report?
Do you have the confidence to invest in this company?
Is some negative newsabout the company circulating?
How are analysts predicting the future?
How is the management of the company?
What are their growth prospects?
Am I aware of the insider activity?
Is it an internationally renowned company?
How is their marketing strategy?
Have therebeen any changes in the managementrecently?
How consistent has been theirperformance?
Has there been a sudden shift in their production?
Whenever you invest you should be aware of your limits and remember not to exceed them. Share market involves a lot of risk , risk taking could either lead to fortunate gains or to bankruptcy.
You should avoidinvesting money more than you can actually afford.
Know about your investment well and do not blindly depend upon your broker.
Follow regular stock market quotes to keep yourself abreast ofthe market swings.

The share providesyouwith an earning power, gives youpartial ownership of a companyandthe freedom to buy or sell at any moment. But if you are a novice instock trading you need to play safeand equip yourself with alot of information. Unless you are a seasoned player you should invest onlyaftersurveying all the alternatives and never go beyond your risk tolerance.

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