Understanding The Stock Exchange

One of the biggest jokes in the modern world is the stock exchange. People have long felt as though buying stocks and bonds is one way to make sure they will have wealth at a certain time in the future, usually when it comes to retirement. They believe if they can find the best and newest company to come out with some product, they will be set for life. People further make the mistake of thinking that the stock exchange operates according to set, easy to understand rules that allow just anyone to make a fortune.

Unfortunately, this is not the case. While there are millions of people out there who claim they understand the stock exchange at all, most of them do not. In an ironic twist, the ones who tell you they can't accurately predict what the stock exchange will do are the ones whose advice is probably best worth listening to. They don't make claims that refinancing indexes will make you a millionaire, but they can tell you honesty about the nuts and the bolts of the system.

Image courtesy of SHLAW.ca

The recent and continuing meltdown of the North American and global markets should be enough to demonstrate to anyone that there is no easy way to predict or explain the stock market. How a store which sells discount supplies can shut down because of a crash in housing rates is anyone's guess, but it does happen. Still, people do continue to invest and make money in the stock market. So what is their secret?

Well first of all most people dabbling in stocks do have a basic grasp of the terms and abbreviations used to pass along stock numbers. For example, when you open a newspaper and see the stock market numbers on the financial page, there are usually about 100 companies listed. These are the most important companies on that exchange. Keep in mind that there are different companies on different exchanges; the numbers may change when the day resumes.

That's why it is important to understand first which stock exchange you are looking at. Because you can do everything today online, parenting to trading stock, it becomes doubly important to check what you are trading on before you make an exchange.

Next, keep in mind that just because an overall exchange is doing badly, the shares you own might not be. The numbers listed under a particular exchange are an average of its biggest companies only; some companies could still be climbing in value even if the exchange is not doing so well. Grasping the ins and outs of the stock market can be tricky, but Stocktrader.com has some helpful advice.

Copyright (c) 2008 -