How To Get Started in the Stock Market

Whether you are a seasoned trader or a newbie, these tips should help understand some trade secrets known only to a few experienced investors. They are known as "trade secrets" and are part of the reason some people succeed and others do not.

The first secret, of course, is to know your market. Study every available outlet, watch the news, and know Dow Jones and NASDAQ like the back of your hand. Watching the market is the beginning of success, knowing how stocks behave, and knowing what to expect from a company over a period of time can give you an education that will help you tremendously in the long run.

Learn how to get quotes, how to place orders and how to buy and sell stocks. You should be very familiar with limit orders, stops orders and market orders. These are explained because surprisingly, many people do not know that a market order is when you buy a stock that goes down immediately and must be bought with patience. A limit order is when you can buy a stock at a specific price. These are orders that should become second nature.

A stop order is used to lock in a price, or profit. If a stock is up from the price you paid, a stop order can sell at the higher price, however, even that can change, and if the stock drops before the sell goes through, and that stock happens to drop, you're stuck with the loss. Knowing this trade secret is going to save you a lot of money! Lastly is a little known order called a stop-limit order, which if combined with stop orders can be combined to save the losses, and benefit with some gains.

Other terms, such as P/E ratio, PEG and YPEG, market cap, book value, uptick and downtick, short interest, can all be taught in seminars, online or in books - so that nothing is unfamiliar, and each stock can be understood completely, how they act and react to understand what will bring you a profit. Knowing these terms contribute to "success".

The show CNBC is a great educator - find the guests who are experts in this field, and listen… they will cover things that you won't find readily available. They have been there done that - and can share some seriously helpful tips, and most are successful investors, if they're on CNBC - so use this outlet!

The economy drives the market, and stocks go up because of good income earnings. Earnings drive the market, and in this approach, understanding the stock market becomes quite simple. Getting the current information, not so simple unless you read and keep up.

Some people who have difficulty understanding how the market works, settle on mutual funds, however, although it is safe and secure, it is a painfully slow growth. According to a stock expert and personal friend, there are some ways to make a profit, even at the beginning of trading. He calls them "sure fire profits" - and even though they may seem complicated, they work - well they did for him.

His advice - watch a stock you might want to buy for about 10 days, at least. Eventually you'll get the signal that it's time to buy. Make sure you watch a stock that is stable, and growing slightly or rising with momentum. Watch for the set-up, such as the typical two days up and two days down. If the down days don't go below the 10-day average you've calculated, and the divergence is happening within the 10 day standard, you should feel safe to place an order.

It is complicated yes, because the other factors, such as the exponential stochastic indicator never entered his definition, but the basics are there and watching will give you more insight than you could imagine. My friend said, buy on the 5th day after the stock has been in the 10-day deviation period.

Then comes the always present question - when to sell? This is when it seems a little more complicated. Something to remember though, technically, stocks that are in uptrend usually go up, and stocks in downtrend, generally go down. It is as simple as that - and watching, one stock at a time, at different times of the day, and week will give you the queue to sell.

But the simplicity of stocks in the Internet market appear much more stable. For example, Yahoo! Is always making money, bar a few downtrends, as well as other smaller, but successful Internet companies. They are not as irregular and unpredictable as others, nor as exciting, however, they are a good investment.

One investor bought Amazon stock, even though he was unsure it was going to turn a profit because it was losing money. But - during the time the stock was owned, it gained! It also doubled in one month and split. This is because, as he stated, Internet stock is more reliable, and companies such as Google, Yahoo! and Amazon are reliable.

Keep in mind, there are no such things as "sure" bets. So many variables and economic issues come into play. But when you do you homework, the gains are bound to come!

Kristy Ramirez is a debt free and frugal personal finance writer for Life Insurance Finder where she helps people to compare life insurance quotes and select the best policy to meet their needs at the best possible price.