DEFINATIONS OF EVERY WORD USED IN STOCK MARKET TO BE KNOWN..............MUST READ

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What is the Stock Market Really?
The stock market (or equity market) is the global marketplace where corporate shares are issued, bought, and sold through electronic exchanges or over-the-counter transactions. The stock market is vital to a free market economy and the world of commerce in that it supplies companies with needed capital for growth, and stock investors with a partial share in the ownership of a company with the potential for significant gains related to that company’s future performance.

Stocks are a key element of most every investment portfolio. The best stock investments yield the highest returns of any investment vehicle in existence. Stock market investment has historically yielded an average return of around 10-12% annually, with many years showing much greater returns.

As with all good things there exists a flip side—the potential for high return is paired with the risk of investment loss. To effectively minimize this risk, a solid understanding of stock market investing practices is essential.

What are Stocks?
Simply stated, a stock is a share in the ownership of a company. Stock (aka shares or equity) is a shareholder’s claim on the corporation’s assets and earnings. The more stock acquired, the higher the ownership stake in the company.

Every shareholder does not have the right to tell the company’s CEO how to run the business. Rather, each share of stock is allowed one vote to elect the board of directors who will oversee the running of the company.

Stock is traditionally represented with a stock certificate, a piece of paper denoting ownership, and once could only be traded in person. Today almost all stocks are kept electronically “in street name" by a representing brokerage firm allowing for quick and easy trading at the click of a mouse or over the phone.

Stock Investment Risks and Rewards
The reason most people get involved with stock investing is the potential for a great return on investment. There are two main avenues for taking advantage of stock investing gains.

Dividends are a distribution of a portion of a company’s earnings to share holders. Dividends are quoted as either a dollar value per share or a percentage of the current stock market price. Great stock market picks can often become great income generators through their high dividend yields. Not every company offers dividends to its stock holders.
Open Market Trading. If a company does not offer regular dividend yields to its share holders, the only other way to realize gains through the stock’s growth is by trading on the stock market for the best possible price available. The ins and outs of how and when to buy and sell is learned over time through research, expert advice, and experience. A1stockpicks.com offers hot stock picks daily for our members.
An important and appealing feature of stock is that the maximum loss the shareholder ever assumes is the value of the original stock investment. Shareholders can not lose more than their original purchase price. Stock holders are not personally responsible for assuming company losses or paying debt.

As with so many things in life, successful stock investment requires a good understanding of basic principles. Choosing a few stock investment options rather than ‘putting all the eggs in one basket’ is another fundamental of stock investing. Combine this with expert stock advice from experienced online stock investment professionals and the stage is set to start building real and lasting wealth.

Courtesy : Stock Picks, Stock Research and Daily Predictions

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Company stocks are most commonly traded on exchanges. These can either be physical arenas full of excited brokers, like the trading floor of the New York Stock Exchange (NYSE), or virtual exchanges that consist of a network of computers and databases, such as the NASDAQ, that handle all aspects of stock trading electronically.

The entire reason for a stock market is to make easier and more organized the exchange of stocks between buyers and sellers. Imagine the difficulty a company would have trying to call individuals to find buyers for their stock. Buyers as well have the advantage of a system of stock investing professionals (brokers) and one convenient place to find the information and stock picks they are looking for.

Bull Markets & Bulls An optimistic market where stock trading flourishes, gains are high and people are making money. Bulls tend to be optimistic in their stock investing and are willing take some risks.
Bear market & Bears A market on the down turn. Trading becomes somewhat sluggish and profits decline. Bears tend to be somewhat pessimistic and cautious in their stock investment practices.
Chickens Investors who live in fear of taking any loss whatsoever. They stay with very, very conservative investments or get out of the market all together. When a stock takes even a small dip, these investors will normally choose to sell to protect from further loss, rather than wait for recovery of their stock investment.
Pigs These are the big gamblers in the stock market investing world. They are always looking for that one big score even when the risk is very high. Pigs are impulsive and trade on tips without doing the research, often resulting in huge losses.

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The general rule regarding the investment risk is that the higher the potential gain, the higher the risk, and vice versa. This means that you need to figure out the amount of volatility in the stock prices that you can handle, without worrying yourself sick when stock investing. Once you begin investing in stock it is important that you refrain from investing all of your capital until you are certain that you are comfortable and you will not make investing errors. You may want to start with investing 15-25% of your capital initially, and then work your way up as you gain more knowledge beyond the investment basics.

Four Characteristics Necessary for Successful Stock Investing

First and for most you must have the knowledge necessary when planning your investing strategy. Will you use fundamental analysis when buying stock, or will you practice technical analysis. There are many investment strategies available to investors just getting started in learning to invest in the stock market. It is important to find out which strategy works for you so that you become knowledgeable and successful in using that technique.

Discipline is another characteristic very important in stock investing. The ability to find an investing strategy that works and to stick to it is crucial to successful investing. Many investors too often are driven by greed and fear rather than their developed techniques. Once you find a strategy that works for you, stick to it, and do not allow yourself to be overtaken by psychological issues which will inevitably lead to you to make dreaded investing mistakes.

Your time and commitment to building a strong portfolio are necessary to ensure your financial success. Be sure to map out a strategy that will fit your lifestyle and also ensure portfolio diversification. The more time you commit to ensuring a positive financial gain, the more your portfolio will thrive.

Lastly, successful stock investing requires a lot of patience. Don’t let yourself jump the gun in efforts to see your portfolio grow. Allow yourself time to know develop the investment fundamentals necessary to see your financial goals come to life. The investor who establishes fluctuating time frames for holding different type of securities should have more patience knowing that their ideas are well researched. Remember, anything worth having takes a lot of time and commitment, and in with that you must first have patience. Portfolio management when stock investing is a not only a science but an art that is specific to each individual investor.

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Investment Strategies

Before an investor starts investing, he should cast a carefull thought on what type of investment strategy he should follow. An investment strategy should be chosen based on your risk profile as well as your long and short-term goals. We present a brief overview of the types of investment strategies that an invetor should consider.

Dividend Stripping

Dividend stripping is a really fun way to make money in the stock market.
Granted, it's never a sure thing, otherwise you could almost guarantee
making big money on the market at all times.

This is not a new technique. It involves scanning the markets for shares
that offer exceptional dividend yields. Then, you find out when the share
will be paying its dividend, and buy the share in time to receive the
dividend.

Now, you may think this is a clever strategy, but bear in mind the market
prices the dividend into a share before you purchase it. So, for example,
if a share is trading at R10 and declares a R1 dividend, it will slowly
rise to R11. On the days the share goes ex-dividend (meaning anyone who
buys the share after this date won't benefit from the dividend) the share
will usually drop by the value of the dividend. You see, markets are very
quick to restore equilibrium. It's near impossible to fool the markets.

However, where dividend stripping works really well, is when markets are
rising. What happens in this case, is the share will usually drop by less
than the value of the dividend, and in some cases will even continue
rising. Very useful indeed!

Pay It Safe And Invest For Income

An income strategy requires a slightly different outlook than other
investing strategies. Your focus shifts from potential capital gain to
future prospects for dividends. Your goal in this form of investing is to
secure a steady income stream by considering shares with high dividend
yields.

This is an extremely conservative strategy with equally unexciting
returns, though you can never discount the possibility of a sweetener by
way of capital growth.

Have You Heard About 'Dividend' Stripping

Dividend stripping is a really fun way to make money in the stock market.
Granted, it's never a sure thing, otherwise you could almost guarantee
making big money on the market at all times.

This is not a new technique. It involves scanning the markets for shares
that offer exceptional dividend yields. Then, you find out when the share
will be paying its dividend, and buy the share in time to receive the
dividend.

Now, you may think this is a clever strategy, but bear in mind the market
prices the dividend into a share before you purchase it. So, for example,
if a share is trading at R10 and declares a R1 dividend, it will slowly
rise to R11. On the days the share goes ex-dividend (meaning anyone who
buys the share after this date won't benefit from the dividend) the share
will usually drop by the value of the dividend. You see, markets are very
quick to restore equilibrium. It's near impossible to fool the markets.

However, where dividend stripping works really well, is when markets are
rising. What happens in this case, is the share will usually drop by less
than the value of the dividend, and in some cases will even continue
rising. Very useful indeed!

Go With The Flow The Momentum Investor's Way

A good momentum investor can almost be equated with a professional surfer.
You need impeccable timing to time the market just right - and ride the
market for just the right period of time.

Momentum investors are often known as 'day traders' - because they tend to
be in and out of the market so quickly. The secret of being a good momentum
investor is to fully understand the market axiom "the trend is your
friend".

So - higher highs and higher lows (on a particular share price) mean the
share is in an upward price trend. Similarly, lower highs and lower lows
mean a share is in a downward trend. The trick is to buy stocks on pullback
while they remain in the upward trend, and vice versa.

It sounds quite rosy, but momentum investing is probably not the right
strategy for you. I wouldn't recommend trying this strategy when you first
start out because it's too close to the rather less welcome categories of
punting, gambling and speculating.

The 'Contrarian" Investment Strategy

A contrarian investor is someone who goes against the mainstream. If you
adopt a contrarian investment strategy then your goal is to make money in
the markets by going against the conventional wisdom.

So - for instance - you would buy the 'out-of-favour' stock when everyone
else is dumping it. In much the same way, you would be a seller of an
'in-favour' stock when too many investors are buying it.

A good momentum investor can almost be equated with a professional surfer.
You need impeccable timing to time the market just right - and ride the
market for just the right period of time.

Momentum investors are often known as 'day traders' - because they tend to
be in and out of the market so quickly. The secret of being a good momentum
investor is to fully understand the market axiom "the trend is your
friend".

So - higher highs and higher lows (on a particular share price) mean the
share is in an upward price trend. Similarly, lower highs and lower lows
mean a share is in a downward trend. The trick is to buy stocks on pullback
while they remain in the upward trend, and vice versa.

It sounds quite rosy, but momentum investing is probably not the right
strategy for you. I wouldn't recommend trying this strategy when you first
start out because it's too close to the rather less welcome categories of
punting, gambling and speculating.