The Stock Market

Note: I am Harrison from the original forum this guide is posted on. This is copied/pasted/edited from the original forum. I can prove that Harrison is me.

The Stock Market:

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Hello and welcome to Harrison's complete guide to the stock market. Thank you to ELiTe, my friend from another forum for suggesting this fabulous topic. This guide will include everything you would possibly want/need to know about the Stock Market. Most guides you try to read on the internet are meant for mature readers, such as adults. They are not good for younger kids/teens who want to learn about it. This guide will be so clear that a 14 year old will be able to read it and fully understand it.

What Will Be Included In This Guide:

*- What The Stock Market Is
*- How The Stock Market Works
*- How Stocks Are Valued
*- Good Ways To Invest In The Stock Market

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What The Stock Market Is:

You would be surprised about how few people actually know what the stock market it. They think to themselves, "Oh, the stock market is a place to make money from buying and selling stocks." They are correct... But you can not get any more general of a definition than that. The above statement tells you nothing about what it is, how it works, and how you can use it.

Free-Financial-Advice.net states that:

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What is clear is that, over the long run, the stock market will climb and climb faster than almost any other traditional investment.

* Source of above quote: http://www.free-financial-advice.net/stock-market.html *

The stock market is one of the only ways in real life to make money that requires a minimal amount of effort. It is such a good occupation that people can receive jobs in relation to the stock market, such as people who buy stocks and sell them within seconds to make profit. The stock market keeps thousands of people around the world in work.

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How The Stock Market Works:

The stock market works purely by supply and demand. Supply and demand can be defined below.

Supply: What the company/organization currently has.
Demand: What is wanted by the public.

In the stock market meaning of the words, the number of stocks a company dictates is the supply, and the amount of stocks that the public wishes to buy is the demand. On of the most important things to keep in mind when buying a stock, is that for every single stock that you buy, somebody else out there in the stock market is selling it. You can think of the stock market as a superstore, such as Wall Mart. Instead of people going to the stock market to buy products that you would see in Wall Mart, they go to buy stock. The two biggest sub-markets in the stock market are the DOW and the NASDAQ. The majority of all the stock bought/sold in the stock market is within the above sub-markets. Years back, the main sub-markets were the NYSE, American and Pacific Exchanges, but those markets have slowly come to a stop.

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How Stocks Are Valued:

Stocks are valued in 2 different ways.

The First Way:

The first way stocks can be valued is by how well the company does during the year. Let's say the company didn't do too well and didn't earn as much money that year as they hoped they would. That would make the value of the stock decrease. This is one of the main reasons why people lose their money in the stock market. They think that the company will do very well, and thus buy a great amount of their stock... When in reality, the company doesn't do well and they lose a severe percentage of their spent money.

The Second Way:

The second way stocks can be valued related to the above terms i mentioned, supply and demand. For those who forgot what supply and demand were... Here are the definitions of the said words in my terms, as i stated earlier in the guide:

Supply: What the company/organization currently has.
Demand: What is wanted by the public.

Let's say the company puts out 1 million stocks, and the public only buys 500,000 shares of the stock. That would cause the value of the stock to decrease. Let's say the company puts out a million shares of stock and the public busy 900,000 shares of it. That would cause the value of the stock to increase.

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Good Ways To Invest In The Stock Market:

Here are my own personal tips for you when investing in the stock market.

#1. Always take taxes into account. When you buy stock, no matter how many shares you buy, whether it is 1 or 1 million shares, you will be charged a small fee of tax on each stock, which really adds up when you buy shares of stock in bulk quantities. So think before you buy. You might forget about tax and buy a lot of stock without knowing you can not afford the tax costs.

#2. Never, and i say NEVER try to predict the market. You might think to yourself, "Oh look at this stock. It keeps rising. I'm going to buy a lot of it." That is the dumbest thing you could possibly do. A stock could completely crash merely overnight. So never think you know anything.

Thank you for suggesting this topic ELiTE. No pictures have been added as your request.

Thanks for reading.

Pictures:



^^ A stock market table showing the daily changes of the stocks.



^^ A picture of the New York Stock Exchange.

 

I have been looking for a guide like this for a while now. Very Nice! It really helped me. I might PM you with some questions later. Do you own stocks yourself?

Some things to make your guide better:

-Change the color as Dark Green is a bit hard to read with the backround.

-Add a bit more pictures if possible.

Other than that very good work.

 

A good basic guide, parts are similiar to one of the guides I wrote on the topics of banking/investing.

Perhaps go a bit more into the details of what exactly a stock is, the various vehicles and methods you can use to trade stocks, possibly include some charts showing the relative financial strength of stocks over the years, etc. Doing a few of these small things would really strengthen your guide. Great work!