Scalping. Day Trading. Swing Trading. Buying for the long run. These are all terms used in stock market trading. But what do they mean? When you are a beginner to the realm of online stock trading, you need to familiarize yourself with the terminology that is essential in making wise investments.
So what exactly is "scalping"? This term is used with the involvement of buying big and capitalizing on the small moves. Every one of them. In other words, purchasing a large quantity of one stock and then watching every move that company makes and adjusting your investment accordingly.
Day trading involves buying of stock and waiting for a big move the company makes, therefore increasing your profitability. This would typically evolve over a period of time rather than quick decisions.
Swing trading on the other hand, is where you would purchase stock and hold it for short periods of time in anticipation of a substantial increase in price. Buying and holding entails long periods of time. This type of trading is based upon the assumptions of how a company is going to grow in value.
Fundamental analysis is economic dependent. It is dictated by the information available for supply and demand. Whereas technical analysis is observed in detail how the effects of time, price and sentiment are on the market.
Buy. Sell. Trade. The excitement of the stock market can be like that of a kid at Christmas. The value of shares - a portion of the company an investor holds - has to be agreed upon by both the seller and the buyer. If a buyer is willing to pay more for a share of stock then the value of that share becomes higher. And vice versa if the seller agrees to a lower price for a share. Think in terms of bartering at the farmers market but on a bigger scale.
While it may be commonplace to assume that there is only one stock market, there are, in fact, stock exchanges all over the world. Whether buyers and sellers engage in transactions on an exchange trading floor or electronically, your best bet is to become aware of the terminology of the stock market prior to making any purchases.
Gerd C. Pacher is a passionate stock trader and has published numerous articles about online stock trading. Read more about this topic at his site http://www.stocktradingabc.com/
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