Friday, March 12, 2010

Stock Market Tips - The 12 Most Important Tips to Get Started

Look before you leap is the most relevant of all stock market tips offered by investment specialist, don't rely on the stock market tips offered by your friend, the waiter at the restaurant or your brother in law, in other words trust your senses when making an investment. Your pre-investment research should include careful analysis of the market trends, industry performance and the price fluctuations of a stock so that you can pick the winners. Here are some stock market tips that will help you to familiarize yourself with some important concepts of equity investments.

Tip #1: When you buy a stock you are purchasing partial ownership in a company; also known as shares; these stocks give you a right to a part of the company's profits and assets; however, you are exempt from any liabilities that the organization may incur through the course of business.

Tip #2: There are different types of stocks and they offer a variety of features. While choosing the type of shares, you should ensure that the stock meets your investment objectives. For instance, if you are looking for a regular income, you should choose stocks that give regular dividends. On the other hand, if you are looking for capital gains, you should choose stocks that have a potential for significant price increase in future.

Tip #3: The stock market is not very different from an auction house where the number of buyers interested in a particular object often determines the extent of price rise

Tip #4: Stock prices are prone to fluctuations and depending on the type of stock you invest in, you may witness quite a bit of volatility on a daily basis

Tip #5: Companies only trade in their own stocks once; when they offer the share to the public for the first time through an IPO or initial public offering. Subsequently, the supply and demand factors for a particular stock and the company's performance sets the price of the shares without any interference from the company.

Tip #6: Stocks are traded through stock exchanges and the NYSE or the New York Stock exchange is the primary stock exchange in the country that has the highest number of blue chip companies listed on it.

Tip #7: There are two ways to purchase a stock, you can wither get in touch with a stock broking firm and open an account with them or you could enlist with an online stock broking firm and conduct stock trading and transactions online

Tip #8: You will need documents such as your social security, proof of residence and identity to open an account with a stock broking firm

Tip #9: The equities market works on a basic principle; that is a higher risk equates to a greater potential for reward; however, this principle does not always hold true.

Tip #10: You can get information on stocks through the stock charts and tables in your daily newspaper

Tip #11: Do not invest in stocks with your life's savings or with the money needed for your basic expenditure; stock market investments should be undertaken with any surplus money that you have after you have taken care of your basic needs and savings

Tip #12: If you are ready to try your luck in the equities market; it is essential to gather as much information as you can on stock analysis, investment strategies and the various tools used for the purpose from books, online articles etc.

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