Playing the stock market

There are many horror stories doing the rounds of how evil stock markets can be. Yes, there are a number of investors who have lost literally millions overnight, but there are also a lot of investors who have made millions playing the market. Most people even end up with the same amount they started off with. The fear may be enough to turn you away from the idea of investing, but the fact of the matter is that you can be successful if you are playing the stock market properly.

The stock market is basically like any other marketplace but instead of buying tangible goods you buy a portion or share of publicly owned companies. Some publicly owned companies have millions of shares, which the public can buy. If the company does well, the shares will increase in value, but if the company takes a dive then the share price will drop. If it does drop it doesn’t mean you should sell them right away, but you may want to keep them if you think that the company will recover from their slump.

If you have ever heard of the phrase “buy low, sell high,” don’t ever forget it. It is what the term suggests. When you find a company that has potential to do really well, or they are already doing well but their share price is low, then buy some. When the share price increases then you can sell them if you so desire.

When playing the stock market do your research before you buy any stock. Read the finance section of your newspaper or look the company up on the Internet. Don’t put all your eggs in one basket, try and diversify your portfolio. The reason for this is that you never know when a company is going to crash, even though they seem like a good investment, so don’t put all your money into that because you may end up losing it all.

Regardless of how the market is doing, aim to invest a certain amount per month or every three months. The common style of play is always looking ahead. Buy more stocks when prices are low, and fewer stocks when prices are high. Either way, your money is being invested, and you are less affected by any dips in the market. Since the stock market is so unpredictable, make sure you have a significant amount of cash reserves available in savings accounts or money market accounts so you can survive serious crashes in the stock market or any significant losses.

When you decide to start investing, make sure you’ve checked out all your options before you buy. You can do it on your own or through a stockbroker, but whichever route you take, playing the stock market always involves risks.

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