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Basics of the Stock Market That You Should Know

 


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Some basic of Stock market that you should know. . . I. GOOD OBJECTIVE It is a good idea to specify an objective from the very beginning and work according to that very policy. And the better option is to work in segments to accomplish an objective.

II. STOCK CATEGORIES When stock brokers open up new accounts, they wish to know the details of the investing customers, like financial status, investing experience, and investing objective. The listed categories of investment are: • Income: Investments that make income from dividends or interest payments.

• Growth: Investments that demonstrate price ontogeny commonly newer companies that pay no dividends. • Total return: Investments that will see both toll growth and income from dividends. • Speculation: Income, growth, total return or reflection all business investments sound into these categories. III. SAY NO TO OVER TRADING Some people get addicted towards it. Being a winner for some period of time might fetch good rewards but it is not always so.

People, who get addicted, wish to have more and more out of it. And when sometimes, they don't make money, they break down. They become prone to several illnesses.

The people might get large sums of money after a few years time. Either the trading addicted investor runs out of money or the brokerage firm's compliance department puts a halt to the activity. Compliance departments are diligent and they keep watch on every account closely.

A brokerage firm can help the investor prevent overtrading. Analysis of the trades on a monthly statement can help the investor to stay in control of the amount of trading. IV.

DIVERSIFICATION The diversification is the placing of financial assets into different investments in order to increase the chances for large profits, and to protect against loss. It does not refer to buying the shares of three different computer companies but it means to invest in good companies of different areas, like a good computer company, a garment company and a product company. V. LIMIT ORDER The market moves with a pace. Directions can change in a certain unexpected way. Do the proper analysis before making the decision, make a strategy and stick to it when placing the order. When the stock of a particular company is moving high, you can place a limited order.

Author is a stock market analyst and frequently writes articles on penny stock and how to invest in penny stocks She runs a website where you can get involved with stock chat with the experts. . .

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