Stock Market Basics

Are you interested in investing some of your hard-earned cash into the stock market and don’t know where to start? This short article will be a quick lesson that will teach you the very basics of what the stock market is all about and how you can start making some serious cash. Like most things in life, the stock market is a gamble. However, this doesn’t mean you can’t make it work for you. If you commit yourself to learning as much as you can about finance, I guarantee you will make money.

The first thing a person needs to know is that the stock market is a huge auction–a place where millions of people  buy and sell things. Sometimes you’ll buy something high, other times you’ll buy something low. Fundamentally, the objective is to buy something at a low price and then sell it at a higher price. There are two words that a person must become familiar with when trading in the stock market. Those words are bid and ask.

When a person places a bid, they are actually bidding (just like in an auction) on what they want to purchase. An example would be to tell someone that you are only willing to pay $20.00  for a shirt, henceforth, you have just placed a $20.00 bid on the shirt. When referring to the stock market, a bid is the dollar amount that you are willing to spend for a given stock. Sometimes you’ll be able to get some really good deals by bidding, but other times you have no choice in what the price is.

An ask is much different than a bid. This is when the person selling something sets the price and is asking you to buy at a certain price. Using our shirt example again:  If I was the person who owned the shirt, and I was selling it, I would have a price that I am asking a person to buy the shirt for. So you have two parties involved: the bidder who is the buyer and the asker who is the seller. Successful companies already have high asking prices so your best bet is bid on stocks with low prices if your goal is to “buy low and sell high.”

And that’s all you need to know to get into the stock market–I’m serious. All the knowledge in the world of finance can’t guarantee you’ll make money but if you stick with the principle of “buy low, sell high,” you should do OK. Of course, luck plays an important factor in the stock market game but if you’re randomly choosing stocks trying to find the next Google, you’re better off playing the lottery. Do your research before you invest and watch the money pile up!

J. Garrett 


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