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F.A.Q.'s

Stock Markets - What are they and how to people profits.

"Stock Market" is a collective term that refers to both the physical location for buying and selling stocks, as well as the overall activity of the market performance within a certain country. When you hear phrases like "The markets were down today," it refers to the activity of many stock exchanges around the globe.

The major exchange in the UK is the London Stock Exchange (LSE) while in the US are the New York Stock Exchange (NYSE), the American Stock Exchange (Amex), and the National Association of Securities Dealers Automated Quotation, more commonly known as the NASDAQ.

The correct term for the physical location for trading stocks is the "Stock Exchange". A country may have many stock exchanges and usually any given company's stocks are traded on only 1 exchange, although larger corporations may be listed and trade in several.

Global Investments

There are stock exchanges around the world, and it is possible to buy or sell stocks on any of them. The only real restriction on your trading is the oparating hours of each exchange. For example the London Stock Exchange opens Monday to Friday beween 8.00 am to 4:30 pm while the NYSE and NASDAQ operate from 9:30 am to 4:00 pm Eastern Time, Monday through Friday.

Other exchanges around the globe have similar opening hours based on their local time. This means that when you trade on the Hong Kong Stock Exchange, your order would be executed sometime between 9:30 pm and 4:00 am New York time.

Here are some of the locations of the world's major stock exchanges:

Japan (Tokyo Stock Exchange)
India (Bombay Stock Exchange)
Europe (London Stock Exchange, Frankfurt Stock Exchange, SWX Swiss Exchange)
the People's Republic of China (Shanghai Stock Exchange)
United States.

Stock Market Variations and Fluctuations

The economic health of a country will strongly influence the way its stock market performs. When a countries economy is doing well the market is what's called bullish. Bull markets occur during times of high economic production, low unemployment and low inflation. When people have the 'feel good factor'.

The opposite of the bull market is the bear market. Bear markets follow downward trends in the economy. They tend to emerge When inflation and unemployment are rising. One consequence of a bear market is that stock prices are usually falling.

Stock price fluctuations are also affected by supply and demand both in a physical and mental sense. Seeing a stock price rise quickly can cause investors to jump on the bandwagon, and this rush to buy forces the price up even faster. Events like this are dependent to a great degree on investor psychology.

Likewise, a falling price can have a similar effect pushing the value in the opposite direction. These are generally short-term fluctuations and stock prices tend to normalize after such runs. It may be wise to point out here that these generalizations may change when trading with stocks that have physical supply and demand limitations.

The are many opportunities for people looking to invest and make profits, the stock exchange is only one them. Other popular markets include the Foreign Exchange Market (FOREX), the Futures Market, the Options Market. Some people even make profits by betting on what the stock markets will do but without actually buying stocks. These people are called financial fixed odds traders.

FOREX: World's Largest Investment Market

The FOREX is the worlds biggest investment market in terms of value. FOREX traders essentially buy one currency set against another and they then make a profit from small changes in currency value. Most FOREX trades are started and finished in a 24-hour time span. Forex traders have to keep a very close watch on the market in order to make profitable trades buying low and selling higher.

The Futures Market

The Futures Market exists as contracts to buy and sell certain goods at specified prices and times. It exists because buyers and sellers of goods want to lock in prices for future delivery, but market conditions and world events can make the actual futures contract fluctuate considerably in value.

Most investors in futures markets are not interested in the actual physical goods -- they are only in the profit that can be realized from buying and selling the contracts.

The Options Market

The Options Market is fairly similar to the Futures Market. The main difference is that an option is a contract that gives you the right (but not the obligation) to trade a stock at a certain price on or before a specified date. Options can be traded on their own or they can be purchased as a form of insurance against price fluctuations within a given time frame.

Financial Fixed Odds Trading

The fixed odds trading marketplace exists for people to place bets on what one or all of the above may do. The advantage of financial fixed odds trading is that it is possible to profit if the markets go up, down or even sideways.

Stocks: Low - Medium Risk, Long-Term

All of these markets are considered quite risky without considerable knowledge and experience. They also require close monitoring of market movements. Stocks, on the other hand, are less risky because movements of the market are usually more gradual. Although short-term investment strategies are possible, most people view stocks as long-term investments.

To trade or bet financial fixed odds trading on the other hand does not require as much knowledge and most trades last from one to fourteen days although some can last much longer. Winnings are tax free in the UK and profit compounding can generate spectacular profits both long and short term.