Important Terms You Should Know About the Stock Market Basics
When you are still starting to learn about the stock market basics, there are a lot of terms that you should be familiar with.
Read and learn about the bulls, the bears, and the farm before you start investing in the stock market.
A bull market occurs when every aspect in the economy is doing great.
For example, people are getting jobs, the gross domestic product (GDP) is increasing, and stocks are rising.
This is the easiest time to pick stocks since everything is increasing.
However, bull markets do not last forever and sometimes it can even lead to risky situations.
This happens when the prices of the stocks have become overvalued.
A bear market, on the other hand, is when the economy is tough and the stock prices are decreasing.
This is the toughest time for you to pick highly profitable stocks.
There is one solution that you can use during a bear market; it is what traders call short selling.
Another technique is to wait it out until you feel that the bear market is about to end.
Then you can start buying in anticipation of a bull market.
There are also other "animals" on the farm.
These are called the chickens and the pigs.
Chickens are always afraid to lose anything.
Their great fear of losing money overcomes their need to gain profit so they only invest in money-market securities or quit trading in the markets entirely.
While it is true that it is better to be safe at all times, you are also sure to never see any results if you never have enough courage to take any amount of risk.
Pigs are identified as the high-risk investors.
They are the ones looking for that one big shot in a very short period of time.
They usually buy hot tips and immediately invest in companies without exerting much effort and diligence.
So which type of investor are you going to be? Be sure that you don't jump into the market before you have fully understood the stock market basics.
Be diligent and conservative and never put your money into anything that you are not confident with your knowledge about it.
Read and learn about the bulls, the bears, and the farm before you start investing in the stock market.
A bull market occurs when every aspect in the economy is doing great.
For example, people are getting jobs, the gross domestic product (GDP) is increasing, and stocks are rising.
This is the easiest time to pick stocks since everything is increasing.
However, bull markets do not last forever and sometimes it can even lead to risky situations.
This happens when the prices of the stocks have become overvalued.
A bear market, on the other hand, is when the economy is tough and the stock prices are decreasing.
This is the toughest time for you to pick highly profitable stocks.
There is one solution that you can use during a bear market; it is what traders call short selling.
Another technique is to wait it out until you feel that the bear market is about to end.
Then you can start buying in anticipation of a bull market.
There are also other "animals" on the farm.
These are called the chickens and the pigs.
Chickens are always afraid to lose anything.
Their great fear of losing money overcomes their need to gain profit so they only invest in money-market securities or quit trading in the markets entirely.
While it is true that it is better to be safe at all times, you are also sure to never see any results if you never have enough courage to take any amount of risk.
Pigs are identified as the high-risk investors.
They are the ones looking for that one big shot in a very short period of time.
They usually buy hot tips and immediately invest in companies without exerting much effort and diligence.
So which type of investor are you going to be? Be sure that you don't jump into the market before you have fully understood the stock market basics.
Be diligent and conservative and never put your money into anything that you are not confident with your knowledge about it.