How to Trade Stocks
As the stock market rises in value new investors and potential traders become interested in how to trade stocks. How to trade stocks successfully is not just a matter of acting on a stock tip from your friend. It is a matter of learning both fundamental as well as technical analysis of stocks, market sectors, and the market in general. How to trade stocks successfully starts with learning the basic terms and then the skills sets necessary to trade online.
Where the Money Is
Stock traders make money buying low and selling high or by shorting a stock and then repurchasing it after it has fallen. This approach has to do with bull and bear markets, trends, trading channels, and scalping in day trading. First of all what are bull and bear markets? A bull market is one in which prices are rising on an ongoing basis. A so called bear market is one in which prices are falling. These are market trends and not day to day price changes.
Secular trend: lasts more than five years.
Primary trend: lasts for more than a year but less than five.
Secondary trend: lasts for a few weeks or months but less than a year.
Understanding these terms is important for successful stock trading. If you engage in range trading (repeatedly buying at the bottom and selling at the top of the market for a stock whose price cycles up and down) you need to successfully anticipate when a stock will hit its peak and when it will bottom out and reverse course. In a long term bull market the general range will steadily head upwards causing you to continually adjust the channel in which you trade. Anticipating when the market will turn requires analysis of evolving market sentiment.