Are you looking to make easy money in the stock market? Well it’s simple. You just buy low and sell high. Wait, you didn’t really think it was that easy, did you? If you want to learn more, please read on.
While making money in the stock market is conceptually easy, the reality is, it’s not so simple. And it hasn’t been simple since people were selling stocks under the old buttonwood tree on Wall Street in New York City in 1792. Wow, that’s a long time to be buying and selling stocks in companies.
In the US, the two main markets are the New York Stock Exchange (NYSE) and the Nasdaq. While they used to go about things differently, today all stocks are essentially traded online over the internet.
Originally the NYSE had a room where people would yell out prices and other people would run madly about trying to match up those prices with buyers and sellers. If you think of the movie Trading Places, with Eddie Murphy and Dan Ackroyd, you have an idea of what I’m talking about. While that’s how the NYSE used to do things, they’re all computerized today. The Nasdaq on the other hand, is an electronic market. It was designed that way and has been operated like that since inception.
The easiest part of buying and selling stocks is opening your account. You find yourself a licensed broker. Fill out their forms on their website and once they open your account, you give them money. See, how hard is that? The tough part is figuring out what stock to buy and at what price.
Generally there are two schools of thought on buying and selling stocks. There’s fundamental analysis and technical analysis. Ok, there’s sort of a third school that uses both, but you really can distill most stock decisions to one style or another.
Fundamental analysis looks at the operation of a company. It looks at a companies products, it’s sales, it’s expenses and it’s customers and tries to figure out how much a piece of that company is worth. Fundamental analysis is a lot of math and figuring out the moving parts of a company. You then distill all that information to determine how much one share of a company is worth.
Technical analysis thinks all that information about a company is pure hogwash. All the technical analysts care about is the stock chart. They have various channels and price support levels and other technical indicators that tell them which stock to buy and at what price. Some technical traders don’t even know what a company may do. As long as the charts look good, they make their determination and place their orders.
Once you figure out your price, you go to your brokers handy dandy website and place your order for your stock. If you’re lucky and have a good broker, the price you actually get, is pretty close to the price you wanted. See how easy it is to play the stock market?
Oh yeah, whether you make money is determined by whether you actually bought low and can sell high. If you’ve done your homework and the market agrees with you, then you’ll probably do well. Good luck!