One of the first stock market for beginners posts, I quoted this important rule from investing guru Jim Cramer; "Bulls Make Money, Bears Make Money, Hogs Get Slaughtered". The basic meaning of this stock market for dummies rule is that greedy investors will almost always lose.
How does the stock market work? The stock market is really split into two: bull and bear markets. When the economy is good, investors buy more and therefore the market is in bull mode. When the economy is poor, investors sell more and therefore the market is in bear mode. That's the stock market basics of it.
So staying with this stock market for beginners rule, investors can be profitable as long as they take a bull or bear position. To be more specific, when an investor takes a bull position, they know there are many stocks out there that can provide them with good profits so they don't stick to one stocks. Instead they spread out their money across the market and continuously take profits to reinvest them in other shares.
When an investor takes a bear position, they know there aren't many stocks out there so they will either invest in defensive stocks or stay away from the market. Either way, they aren't losing money. So when an investor ignores this stock market for dummies rule and doesn't take either position, that's when they lose.
However there are times when you can ignore this stock market for beginners rule.
When a stock owned has raced up 20% or more in 8 weeks, it's a good bet that it will continue to grow. Usually, investors would follow stock market basics and take some off the table (sell a portion of their position) however, this is a good time to be a pig. It's almost a guarantee that if you own a stock that has had a huge spike like this, the market will force it to keep rising.
If you found this stock market for beginners post helpful and wish to find more information like the rules found in this blog, visit Secrets of Successful Traders. There you can find more stock market basics rules that will make you a better investor.
I can't teach everybody how the stock market works completely without giving you additional sources to use. I can teach you the basics and many of the more advanced rules but when it comes down to it, there is just way too much to cover. But reading up on the sources I've been giving you (found on the sidebar), you'll be able to learn as much as you put in. And eventually, you can be a professional investor making millions in a lucrative entity.
Secrets of Successful Traders is a trusted source. But if you need more reassurance before purchasing the e-books on this site, they offer an 8 week 100% money back guarantee. How does the stock market work? You can finally learn everything you need to know with Secrets of Successful Traders.
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