| Stock market investing guide |
According to the U.S. Department of Labor, approximately 320,000 brokers and traders are currently employed as securities, commodities, and financial services sales agents. Of those agents working solely in securities trading, around 143,000 work exclusively for brokerages and exchanges while nearly 57,000 are self-employed independent agents. Nearly 264,000 agents work with wage and salary compensation while the remaining agents receive only commission incentives. A total of 829,700 people are employed as security and commodity brokers or as service personnel. Stock Market Investing for fun and profit
Stock Trading: A Comprehensive Industry Analysis and OverviewA stock trader, also known as a stock investor, is defined as any individual or firm who purchases and sells stocks, bonds, or other financial assets on a financial market. Firms or individuals whose principal role it is to trade equity, or stock, on stock markets are known as traders. Traders typically attempt to profit from the short-term price volatility with trades lasting from only a few seconds to several weeks.Competition for professional trading positions is considerable, especially for those seeking entry-level positions. Investment banks are the largest employers of stock traders and investors and also have the strictest hiring standards when taking on new traders. Turnover for entry-level traders is higher than the national average due to disenfranchisement with the industry and underperformance. Those who choose to remain as traders develop a strong attachment to the occupation and enjoy high earnings. In most cases, "traders" are trained professionals, possessing post-secondary business or finance education. Professional traders act as an independent money manager or special adviser with the express intent of adding value to the finances of individual clients. These individuals can also be known as financial advisers or managers. Typically, professional traders are independent individuals or is an employee of a large bank corporation. Professional investors deal with a wide variety of financial investments, including equity investment, fund management, and wealth management. Stock trading can take on many forms, ranging from day trading, swing trading, market making, scalping, momentum trading, "trading the news," and arbitrage. Each form of trading bases the principles used by the investor on particular sources of information. Including or combining information sources, from a stock's past performance to current event news, is standard practice when formulating the principles used for trading. Stock investorsseek to increase the wealth of their individual clients through the holding of stocks for an extended period of time. This duration can extend from several months to several years. Investors use relevant information in regards to a company's assets, health, and future growth prospects to make their buying and selling decisions. This practice is known as "fundamental analysis," and is the basis for the mass proliferation and regulation of corporate financial information.Investors seek to "buy and hold"stocks through short-term market losses and economic recession. Such a strategy relies on the continued growth of the economy over time. It relies on the eventual growth of the stock over its original purchase price over time. During bull market periods, for example, during the 1980's and 90's, this strategy tends to lead to greater wealth appreciation due to growth trends of the overall market. Massive short-term market declines, such as those seen during the "Dot Com Bust" throughout 2001-2003, have lead to an exodus from the "buy and hold" theory. In certain cases during this period, markets such as NASDAQ lost more than 60% of their value in a matter of weeks. The greater reliance on short-term investing has also lead to more independent investors and the rise of "day-trading" as a vehicle for individual investment and financial gain.Online Banking and InvestingSince the advent of Internet banking, the practice of day trading has grown considerably. Previously, successful stock trading required the use of a stock broker or bank in order for an individual to make investment choices. Typically, these transactions cost individuals high fees that sometimes negated any potential gains made through short-term investment.Day tradinghas allowed for a higher volume of short-term investments to be made with considerably less capital, or funds used for trading purposes. Any individual with an internet connection can now manage financial investment positions without the need for external licensure or oversight. In addition, online brokerages charge per-trade fees that are far below those attributed to large banks or individual brokers. The surge in day trading has led to the creation of software and online resources for day traders seeking to track their investments and disseminate new information. Online financial brokerages typically provide their online investment tools and information sources as marketing points to potential customers. In many cases, professional traders and investors have abandoned private information sources and have converted to the daily use of publicly-available and highly trafficked financial information sites.FundamentalsDay traders seeking to use the Internet for retirement savings or other long-term growth opportunities can perform the same "fundamental analysis" of companies used by professional stock investors. In addition, online brokerages target retirement investors using television and print advertisement. Because of this, the reputation for careful day trading has grown amongst those seeking to save for retirement or invest discretionary income.Short-term tradingis also popular amongst middle to upper class professionals. In most cases, day trading by amateur day traders does not convert into a profitable experience. In addition, online campaigns toting stock trading programs and day trader advice are available, at cost, but without a discernable benefit. Nevertheless, the thrill and accessibility associated with day trading makes it a lucrative option for many.Stock Market as an "Efficient" MarketBecause the stock market is termed an "efficient" market, and therefore theoretically corrects all potential for future analysis through market mechanisms, prediction is a fruitless pursuit. Because of this, the entire occupation of stock traders is essentially risk management. By ensuring investments are protected from volatile markets unless otherwise specified, professional brokers can protect funds from long-term loss while sacrificing short-term gain. This practice ensures clients lose less money than if they were to invest the money themselves over the long term.While programs ensuring advice on picking stocks and other financial investments are plentiful, no program bears any formal, real legitimacy. In the past, publications such as the Wall Street journal have Paragragh
|