Three Questions to Ask Before You Start Investing in the Stock Market


Stock investment tips

How does the stock market work?

It’s a fair question that likely not too many Americans can actually answer. In fact, data from the Pew Research Center suggests less than 50% of folks in the U.S. actually own stocks at all, and the ones that do tend to be in higher financial brackets. But it doesn’t take a family of millionaires to begin investing. In fact, all it takes is a basic understanding of the market itself.

Plenty of sites can offer you tips on investing in the stock market, but to really build your portfolio, you’ll never more than simple stock investment tips — you’ll need someone who can help you expand. Whether you’re trying to get into options trading or the most basic exchanges on the market, you’re going to have beginner investing questions. Allow us to answer them for you.

Where do stocks get traded?

When you picture the New York Stock Exchange, your mind probably conjures up images of men in ties waving to each other frantically from across the room and others shouting numbers into telephones. The reality might not be as dramatic, but it’s definitely just as urgent (if not more). Exchanges are physical locations where stocks are actually traded between buyers and sellers who decide on a price before the exchange is actually made. There are also digital exchanges, and thanks to 21st-century technology and high-speed fiber-optic cables, stocks are traded now more than 3 milliseconds faster than they’ve ever been before.

What exactly is the NASDAQ?

Think of the NYSE as a physical place where stocks are exchanged, and think of NASDAQ as the kind of trading that’s entirely virtual and has no centralized location. When people check the market pages in the newspaper, they’re often looking for the NASDAQ rating of the day, which tells them exactly how their virtual stocks are doing. These trades occur entirely via computer transactions or other methods of telecommunication. When you read up on tips on investing in the stock market, you’re typically reading methods for how to get ahead in that way.

Why have people said in the past that the stock market is rigged?

This accusation tends to creep up when the market is showing signs of growth. Most recently, it was brought up by author and journalist Michael Lewis, who claimed that high-speed capabilities were effectively giving the traders who use them an unfair advantage — all at the expense of the “common” traders. The truth is that the market is far too large to be fixed like some sort of carnival milk-bottle tossing game. And what most people would call the “stock market” is actually broken down into several smaller markets.

By all means, use all the tips on investing in the stock market you can find. Especially for beginners, every little tip can help — just make sure you don’t get too far ahead of yourself once you hit the big time. More.

Leave a Reply