How to Trade in Stock Market

BASIC TECHNICAL ANALYSIS ON STOCK TRADING
The best time to think of purchasing the stocks is the time when you have the basic technical knowledge of stocks dealing and is able to analyse the market accordingly. Technical Analysis (TA) , helps you to determine when to buy the particular stocks and what can be the suitable period of time for the dealing. There are several good reputed schools/ institutions offering the study of TA but the basics apply to all of them . We do not expect you to become a professional overnight  as TA requires considerable study and pactice with committment and concentration- but knowing just the basics can be profitable to you and can improve your returns and can even save you from financial disasters of which one of the basic reason is knowing nothing about the stocks and yet dealing in it(pople can fool you around if you will not be knowing even the basics )

MOVING AVERAGES
Following are few facts and practises of stocks dealings, that would be acting like one of the guiding forces in stock dealing.

50 DMA (Day Moving Average) is the average price of a stock for the past 50 days plotted on a chart. A 200 DMA is the average price of a stock for the past 200 days plotted on a chart. A rising stock will have rising 50 and 200 DMAs, with the 50 DMA above the 200 DMA. Conversely, a declining stock will have declining 50 and 200 DMAs, with the 50 DMA below the 200 DMA.

Rising stocks generally stay above the rising 50 DMA, or close to it. Conversely, declining stocks stay below the declining 50 DMA.

Bottom fishing (buying stocks that are down a lot) on the premise that the market is wrong and you know better is the amateur’s strategy that on balance produces disastrous results. It makes more sense to go with the trend by buying rising stocks while avoiding (or shorting) the declining ones.
Golden Cross

When a declining stock reverses and starts back up, the rising 50 DMA crosses above the 200 DMA – generally, a bullish sign.

Trend Lines
Stocks don’t move in a straight line, nor are their moves sporadic. They are either in an uptrend (going up) or in a downtrend (going down). A trendline is established by drawing a line through three separate highs or lows on a chart. The upper band is called resistance; the lower band is called support.
A stock trading between support and resistance is in the trading range.
Some stocks have long neat trendlines. Those that have multiple short trendlines going in all directions are said to have a broken chart.

As we all know the future of the stocks in uncertaion , every once in a while stock breaks out of trading range by moving either higher (breakout)or lower(breakdown). A breakout indicates the beginning of a new trend of importance, some may either fail and a resumption of advance after the initial brekout is called follow through.After breakout, a stock can run for a few days before pulling back. A pullback is healthy as long as the stock does not undercut the previous low. Although each successive move higher increases the downside risk and reduces the upside potential, some traders chase the stock – i.e. buy it in a rapid runup.
Recognizable chart patterns that indicate that a stock is about to make a move of significance are called setups.

A stock making new highs is a bullish sign. Sometimes a stock may pull back before the close, printing an NCH (New Closing High).

Thinly traded stocks (stocks trading less than several hundred thousand shares a day) often experience a shakeout – a sudden intraday drop in price that fully recovers by the end of the day. The move shakes out weak hands – traders who don’t have the stomach for wild fluctuations and sell in a panic. Some of these moves are orchestrated specifically for the purpose of shaking out the weak hands in order to buy their shares cheaply; others are the result of traders’ herd mentality – following each other’s closely watched moves. A person who sells in a shakeout and then buys back higher is said to be whipsawed.

A stock staging an unsustainable rise at the end of a run that looks almost vertical is said to go into a parabolic rise. A stock that has a big one-day fall that violates a major trendline is said to be broken.

Stock Market Opportunities

How to Identify Investment Opportunities

When it comes to the Stock Market, are you an opportunist? This term need not have a negative connotation. The definition of an opportunist is someone who is dedicated to making money, no matter the consequence or the circumstances of another’s misfortune.
Investing is not about feeling guilty. You may feel compassion for others whose misfortune results in your gains, but there is nothing wrong with taking advantage of opportunities when they present themselves. Here are some tips here for identifying good investment opportunities as they occur.

Study the Economy

Look at global trends. Right now, many countries are experiencing an economic decline the likes of which have not been seen for decades or more. As the economy changes, so do factors such as the real estate market and the stock market. But the reverse is also true; the stock market itself can affect the economy.
You may want to keep an eye on developing countries. Their economies may be growing while more established countries are still in the midst of a rapid decline. Of course, a strong economy means a strong stock market and vice versa.

Opportunities in a Bear Market

Even though a bear market can mean tragedy for a great deal of investments, for the opportunist it can mean money making ability in the near future.

Of course, the most obvious opportunity is to identify a stock that is expected to recover nicely and buy shares cheap (also referred to as bottom fishing). This is not always an easy thing to do, but can you imagine if you had figured out decades ago that Google was going to be as big as it today and invested in it?

Look for an increase in the market’s volume to signal a recovery. As investors start to return to trading, so will prices increase. This could be a good time to sell, but it is rarely a good time to buy.

Often in a bear market, patience is key. The market has to hit an all-time low, and if you’ve invested wisely, then the only thing you can do is to wait it out.

As the Stock Market goes through its various cycles, you will be in the position for making money if you can identify them before other investors and act on opportunities.

How does the stock market work?

How does the stock market work? How do investors use the stock trading to increase their wealth? Let's have a quick look at the fundamentals behind the stock market and then you will never again have to ask how does the stock market work.

Warren Buffet once said that "The stock market is simply the transfer of wealth from the impatient to the patient". What does Warren Buffet (the greatest investor of all time) mean by this quote? Apart from the obvious I think what he really means is that it is the truly educated investor that will be able to take advantage of the stock market. So I highly applaud anyone that is trying to find out how does the stock market work before you start putting your hard earned money into stocks that you know little about. I think the stock market is very similar to the ocean. It shouldn't be feared, rather it should be greatly respected and if you treat it with respect it will bring you great happiness.

So how does the stock market work? Well when you buy a share you are effectively buying a tiny little piece of a company. I know it may sound weird but that is exactly what happens. For instance did you know that if you bought enough shares in the one company eg. Coke or IBM then you would actually own the company. Now this is never ever going to happen for a number of reasons but I tell you this to explain the concept that buying a share is literally buying a little piece of a company. People often ask me how to buy stocks and is it hard. In this day and age it is an incredibly easy process that takes a matter of seconds. Once you know the stock market basics and have set up an online account there really is nothing to it.

Ok so now you want to know how does the stock market work to make people rich. This is where things get a little bit more complicated because there are so many different ways that investors use shares to make profits. In fact for many investors it doesn't even matter which way the stock prices move - up or down. They will use stock market news & stock trading software to still make a profit. In many cases they can make a bigger profit when the market is falling.

So to truly answer the question know how does the stock market work to make people rich I think you need to start learning about some of the exact strategies that investors are using. For instance 'Buy and Hold' is the most common strategy used by most mum and dad investors. To be honest it isn't really a strategy, in fact I've heard people describe it as 'Buy and Hope' which is probably a better description. Many people sell 'Covered Calls' (sometimes know as share renting). This is a very good strategy that normal people have used with great success. You can use CFD's or options to create leverage but these are definitely no stock market for dummies strategies.With all of these strategies the same principle applies. You buy something when it is cheap and you sell it for a profit. I know that sounds very simple but it is the truth. As with all investing the idea is to make money and the only way you are going to do that is buy buying something that is going to appreciate in value. The next step in you learning about how does the stock market work would be to try and find a stock market for beginners book or to do a stock market course.

There are hundreds of stock market courses out there that will teach you all about the different strategies to use. The most important thing to remember is to get a good education about shares and the stock market before you start investing your own hard earned money. Remember what Warren Buffet said "The stock market is simply the transfer of wealth from the impatient to the patient". So make sure you are patient and truly understand how the stock exchange works before you start transferring your money to the patient