As the title states, I'm a complete beginner to finance. I haven't had a financial background, by the time I got my first proper job I struggled to understand my wage. I did study engineering and am more than capable with complex mathematics. I want to swim against the current and learn how this economy works, in my pursuit of wealth and freedom.
Now I've been trying to wrap my head around the stock market (jumping in at the deep end?). From 2 days of research I've learned that:
- An investor seeks to buy stocks at a low price, and sell when the price is high.
- Price (of a stock) is affected by supply/demand, volume, and possibly company profits.
- Owning a stock is like owning a tiny chunk of the business, with the legal rights that come with it.
- and assorted chunks of knowledge about support/resistance I won't be able to apply yet.
What I want is for someone, with this in mind, to explain to me the relationship between all different values I would see - we're not even thinking about making real-world predictions or reading graphs yet.
So we have supply, demand, volume, company revenue & profits.
How I understand it is: supply/demand affect price of stock negatively/positively, respectively. Volume is the amount of buying/selling activity in these stocks (more volume = more fluctuation, right?). Company revenue (and profit) will help an investor predict company growth.
Can anyone confirm this for me? And back it up with a few points of your own? All answers (except troll ones) will be absorbed and appreciated!
UPDATE: Thanks to everyone who answered, it's good to see I'm on the right track, according to these answers. I won't be investing anything until I'm totally confident but this has brought me closer. Now I'll be hitting the books, combing the web, and absorbing all this information.