An Adventure In Stock Trading
Stock trading involves a person or an entity who engages in trading stock or equity securities on a fairly short term basis. The may buy a stock today, only to turn around and sell it tomorrow if it makes a gain that they can live with. Most of the transactions are short term in nature, and they are looking for quick profits. This is in contrast to a stock investor who will buy and hold the stock, hoping to earn longer term appreciation, while earning dividends, interest or other perks that may become available.
People who engage in either practice must be very knowledgeable because of the complexity and the unpredictability of the stock market in general. Stock trader can act for themselves as well as acting for others. Since stock trading is essentially speculative in nature, the trader will usually do some kind of research on the company that he will be trading and will have a good record of past performance.
Many traders work from charts and graphs of the past performance of a stock. There is some credibility of looking the movement of stocks in this way, because stocks do develop patterns as investors buy and sell stocks in certain patterns over time. Very price buy and sell points can be established on the charts as to when the stock can be bought and sold, and that gives parameters from which the trader can work.
The trader will also make studies of the past financial track record of how the earnings of a company have performed, and will go into detailed analysis of how future earnings will be impacted based on certain economic conditions. Studies of the industry that the company is in will have some bearing on the stock’s performance as well as its volatility.
The objectives and outcomes of a company is an important set of facts to acquire, because it gives a picture of where the company intends to go, and that is always the unanswered question that needs to be asked. Then you need to be able to discern whether the answer is the truth, or perhaps just a lot of hot air.
It takes a lot of experience, the ability to take some risk, yet within the bounds of common sense, and the ability to read into the future of a company’s progress, which has a lot to do with the overall leadership and strength of a company.
Companies do have personalities, and it is an important thing to be able to figure just how that personality is going to affect future earnings and profits. Does the company have any secrets that are yet to be unveiled? Are there any rising sales and marketing stars that have yet to be revealed?
What about the general position of the company in its industry? Are they a breakout company, or will they continue to just get along and not be a standout company?
There are many factors to consider, but the best of the best does somehow figure all of these things out, and they do very well in the field of stock trading.