Stocks

 What are Stocks?

Stocks are a security that signifies a portion of ownership in a corporation and represents a claim on part of the corporation's assets and earnings, 'shares of stocks owned by shareholders of a corporation'.

There are two main types of stocks: common stocks and preferred stocks. Shares of common stocks usually entitles the owner or shareholder to vote at shareholders' meetings and to receive dividends dependent upon the number of shares of stocks they hold. Preferred stocks generally do not include voting rights but, have a higher claim of assets and earnings than that of common stocks shares. For example, preferred stocks owners receive dividends before shareholders of common stocks and have priority in the event that a corporation goes bankrupt and is liquidated.


 Stocks are also Known as "Shares" or "Equity"

An individual holder of stocks (a stocks shareholder) has claim to a portion of the corporation's assets and their earnings. Basically, a stocks shareholder is part owner of a corporation. Stocks shareholder ownership is determined by the number of shares of stocks a person or stocks shareholder owns relative to the number of outstanding stocks shares. For example, if a corporation has 1,000 shares of stocks outstanding and one person or stocks shareholder owns 100 stocks shares, that person or stocks shareholder would own and have claim to 10% of the corporate assets.

Stocks are the foundation of nearly every stocks investors, stocks portfolio. Historically speaking, stocks have outperformed a majority of other investments over the long run.

Who wouldn't love to be the business owner who doesn't ever have to show up for work? Imagine just sitting back, watching your corporation grow, simply picking up the dividend checks that may simply land on your desk and smile as the money rolls in! That my friend could be closer to being reality than you might think or then again, it might just be a pipe dream.

Owning stocks has come to be known as one of the greatest financial tools ever created to be used in an attempt to build and sustain personal wealth. Prior to your interest in stocks taking you from blindly jumping into stocks trading without obtaining a solid understanding of stocks and how stocks are traded on the stocks markets, stocks traders have training available to assist them in the trading of stocks.

For decades, the average person's interest in stocks and the stock market has shown exponential growth. Stocks Trading Online for example is now not just a game at which the rich participate. For some and for many, day trading has become the vehicle of choice for a particular type of lifestyle or a choice for increasing ones wealth. Trading technology available today has opened up a whole new direction of trading skills for those who decide to day trade stocks.

Ask the normal person, walking down the street, to tell you what stocks are - chances are most individuals lack sufficient knowledge about stocks. Hanging out at the lunch room can provide quite a variety of 'financial' advice on stocks, from friends and co-workers. Not saying your friends or co-workers don't know what they are talking about, maybe they do. Investors must realize that they can in fact lose money trading stocks. The wager would be high to find the investor who has 'not' lost money trading stocks. It is also possible to make money trading stocks. Much information found online about stocks, refers to stocks trading or stocks day trading as a 'get-rich-quick scheme'. Nothing could be farther from the truth and when you ask a veteran trader, they will confirm this falsity about stocks trading.   

Anyone trading stocks in the markets today or during the late 90's dotcom bubble understand and recognize the volatility and uncertainty, of a 'good thing'. During the dotcom bubble, it was nothing for individuals to invest their life savings in certain stocks just because certain stocks were a dot com and they thought the stocks share were going to skyrocket. The dotcom era did historically create wealth for many individuals however; many stocks traders found out all too quickly that, nothing good lasts forever and that includes investing in stocks. Individuals began to think that trading stocks was the answer to instant wealth but, were not taking into account the amount of risk involved while trading stocks. While trading stocks or equities can result in wealth sometimes small, sometimes large and sometimes individuals or traders watch as substantial profits evaporate right before their eyes because they 'think' a stocks reversal 'might turn around' or the individual 'think' that a stocks trading price, may go even higher and they don't want to miss out on that potentially larger profit. Many times traders do not run with a trailing stop on trades for stocks, thus a true lack of stocks trading, training.

Successful stocks trading comes over a great deal of time, with a great deal of patience and training. If you don't have the time it takes to learn how to trade stocks, find another career. If you have no patience or the ability to improve the patience that you have, you should not trade stocks. If you think you can successfully trade stocks without training, save the money you will lose without stocks training and find another career.


 Trading Stocks and Earning a Profit During Earnings Season

Ask any stocks trader and they will confirm that earnings season is the most profitable trading time of the year. Earnings season on Wall Street can provide ample opportunities for stocks traders to ring up some profits. Stocks trading action during earnings season will tend to move more intensely and with more volatility, during stocks earnings season. When a financial quarter has ended for stocks on the stock market and its time to lay it on the line how the corporation did financially for that quarter, Wall Street is watching. Current and potential investors monitor carefully the financial reports of stocks they currently invest in as well as stocks they are considering investing in. For stocks that tumble after reporting an unsatisfactory earnings report will see results from their once interested investors, begin to bail ship, selling shares of the stocks that are no longer of interest to them.

In the same sense, short selling day traders will monitor earnings reported for stocks that report negative information about the financial condition of the corporation and those day traders will proceed to short the stocks shares in hopes of turning a profit on the negative news. Successful day traders and swing traders must realize the importance of trading stocks during earnings season and focus on reaping the benefits - long or short. Earnings season tends to create an increase while sometimes a substantial increase in trading volume for certain stocks. Frequently for some stocks during earnings season, volatility will increase as well. More frequent than not, the substantial increase in some stocks volatility is such that the individual refrains from trading those particular stocks.

Due to the fact that we tend to see a large number of stocks reporting earnings during the same time period, many normally low trading volume stocks, stocks or groups of stocks in same sector, receive an unusual boost of interest which in return, results in a substantial jump in interest from newly interested investors, resulting in a sharp increase or decrease in the stocks trading price.

It's not uncommon for a stocks earning report to include an increase in revenues or profits but, forecasts for upcoming quarter are derogatory for whatever reason. Chances are, that stocks shares will more than likely, move lower. Normally just the reverse for the stocks earnings report which are reporting that upcoming financial quarters are expected to worsen, compared to what analysis predicted. Wall Street always has one eye on the future of a stocks performance, poor performance can have a more adverse reaction of a stocks performance even compared to a possibly profitable quarter.

Traders and day traders must realize that its not uncommon for the share of certain stocks to rise, sometimes dramatically, higher ahead of earnings report for certain stocks. Again, this remains at the discretion of the trader but, trading certain stocks ahead of earnings reports can be advantageous for a stocks traders profit portfolio. Certain stocks will run up ahead of earnings only to sell off after actual earnings are released. While it is always important to maintain your stops on the stocks you trade, during earnings season, it is imperative to have your stop in place, ahead of earnings report released.

 Trading Stocks Using Technical Analysis

Individuals and traders tend to utilize technical analysis when deciding to enter a stocks position - long or short. Technical style trading of stocks takes a great deal of time to learn. Day traders and individuals must be prepared for extensive training when deciding to trade stocks by technical analysis.

 Moving Averages for Stocks and Bollinger Bands

Many day traders trading in the stocks market swear by the use of Bollinger Bands. Movement of a stocks moving average can provide extensive guidance as to which direction stocks appear to be moving. Traders must remember that while trading stocks, no method is guaranteed. Traders must realize that should they decide to monitor certain indicators of stocks, there are some indicators that can not, and should not, be ignored.