Chapter 1: Rule Number One
(Don’t Leave Home Without Doing
It)
This is rule one, so in my book it is one of the most basic of things.
Something similar to taking a breath or maybe munching on your food. This
is something basic, not the most important but a staple in your arsenal of
how-tos when it comes to dealing in the financial markets or anything for
that matter.
Knowing What You Are Getting Into
That is right. This is the number one rule. Always know what you are
getting yourself into, before you even take one step in that direction. You
always want to know what is hiding at the end of the rainbow, as the pot of
gold may be booby trapped or worse still non-existent. Just ask those folks
who partook in lucrative sounding projects which later showed themselves
to be nothing more than well-dressed pyramid schemes .
This makes it important for you to know not just the general idea of how
things work, but it is also helpful to have some inkling of the technical
knowledge contained within as well. At the end of the day, whether you are
investing or trading in stocks, forex, futures or cryptocurrencies, the basic
requirement is always to understand the product, so that you can undertake
the decision on when to buy and sell that much better.
Basics Of The Stock Market
Let us know peer into what the stock market is. At its basest form, owning a
stock is not much more than owning a piece of company where the stock
originated from. You become a holder of equity when you buy into a stock.
This generically means that you will do well if the prospects of the
company does well. Similarly, if the company takes a down turn, then your
stock value will then probably depreciate.
Many folks find this easy to grasp, while others still think that the stock
market is just a screen or a website which shows ticking jumping numbers.
Behind those ticking jumping numbers are actual companies present in
everyday life. This gives us an insight to one of the ways of investing in the
stock market. You will realize or discover many things if you just stop and
ponder a little deeper for a bit. Everyone loves to have the example of
Apple stock, but maybe a lesser known name like Keurig Dr Pepper may
draw a bit of your attention. This stock is what most investment folks term
as a consumer staple stock. When you break down that $50 dollar word,
consumer means folks like you and I, while staple means you really can’t
do without it for any extended period of time. Things like foodstuff, drinks,
as well cleaning items will come into mind when we talk about this. Key to
this is also the fact that staples tend to get purchased consistently. If you
looooove doughnuts, and Krispy Kreme is one of your top choices, you just
might have known about Keurig if you thought about it and dug a little
deeper.
What I am getting at is this. There are many stocks out there, as there are
many investment opportunities. Not all of these money making stocks are
known only to the top analysts and hot shot investors. Many have
household brands in their stables and we just have to dig a little deeper into
the things we use, the things we like, and we just might be able to find a
potential winner.
Beyond knowing that a stock is essentially a piece of a company, we have
also got to know some of the technical bits which I mentioned earlier. The
stock counter or the ticker is the representation of the company in the stock
market. Whenever you want to buy or sell a stock, that is one of the most
crucial things you need to inform your broker .
Volume
There is then volume, which shows the total quantity of stocks that
exchanged hands on a daily basis. Volume is an important tool that many
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