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167

Do I make money in the stock market from other people losing money? Not normally.* The stock market as a whole, on average, increases in value over time. So if we make the claim that the market is a zero-sum game, and you only make money if other people lose money, that idea is not sustainable. There aren't that many people that would keep investing in ...


81

Though it seems unintuitive, you should rationally ignore the past performance of this stock (including the fact that it's at its 52-week high) and focus exclusively on factors that you believe should affect it moving forward. If you think it's going to go up even further, more than the return on your other options for where to put the money, keep the ...


79

The first thing that pops up when you open your link is a disclaimer: 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. 66% isn't a very reassuring number for blindly following anonymous strangers ...


67

The three normal ways profit on falling stock prices are: Short sale: Borrow someone else's shares. Sell at current price. Wait for price to fall. Buy back at lower price. Return shares to owner. Buy put options with a strike price lower than current price. When stock drops below strike price of put, either buy shares at new low price and exercise the ...


63

Well, consider it from the other side. Why would a trader be willing to share trades? Consider the following scenario. The reference trader makes a trade in a low volume market. The trade is published so that everyone can see it. Multiple people copy the trade as best they can, but ... The price moves due to the uncommon level of demand. The ...


58

It's worth noting that Warren Buffet is a value investor, not a trader. As such, it doesn't tell you much about technical analysis or trend following. Instead, he's implying that when the market gets overly excited (overvalued) or panics (undervalued), there are opportunities for long-term profits, assuming you do your due diligence and have an opinion of ...


53

The game is not zero sum. When a friend and I chop down a tree, and build a house from it, the house has value, far greater than the value of a standing tree. Our labor has turned into something of value. In theory, a company starts from an idea, and offers either a good or service to create value. There are scams that make it seem like a Vegas casino. ...


43

GOOG stock represents Class C shares, while GOOGL stock represents Class A shares. Class C shares (GOOG) have no voting rights, while Class A shares (GOOGL) have one vote each. Anyone who owned Google stock before the split got one share of the voting GOOGL stock and one share of the non-voting GOOG stock. Of course, there are also Class B shares of Google ...


41

I bought 1000 shares of Apple, when it was $5. And yet, while the purchase was smart, the sales were the dumbest of my life. "You can't go wrong taking a profit" "When a stock doubles sell half and let it ride", etc. It doubled, I sold half, a $5000 gain. Then it split, and kept going up. Long story short, I took gains of just under $50,000 as it rose, and ...


41

It doesn’t matter how far away you are. If you have important information that the public doesn’t then it’s insider trading. Obviously the distance makes it harder to prove or even to suspect. The SEC defines illegal insider trading as follows: Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or ...


38

Not sure why @Brick's answer was voted down; let me try to state it more precisely. maker Type 1 (seller): You tell the exchange that you want to sell at price P, but P is higher than the highest price at which any Type 2 maker is currently willing to buy. (You're demanding too much money in the eyes of everyone who's said they want to buy.) Type 2 (buyer)...


33

Insider trading is any trading done on material non-public information relating to an instrument. If my sister, who works for a drugs testing company, tells me that stage 3 trials of a drug look like they will fail and I trade on that information (probably by shorting a company's stock) that is insider trading. If an employee of that firm trades on that ...


32

Brokers need to assess your level of competency to ensure that they don't allow you to "bite off more than you can chew" and find yourself in a bad situation. Some brokers ask you to rate your skills, others ask you how long you've been trading, it always varies based on broker. I use IB and they gave me a questionairre about a wide range of instruments, my ...


28

When you short a stock, you can lose an unlimited amount of money if the trade goes against you. If the shorted stock gaps up overnight you can lose more money than you have in your account. The best case is you make 100% if the stock goes to zero. And then you have margin fees on top of that. With long positions, it's the other way around. Your max loss is ...


28

To quote Adam Smith, 'Everything is worth what its purchaser will pay for it'. In this case, that means, the value of a stock is equal to the price that someone will pay for it. If you buy shares in a company, the number of people who want shares in that company has just gone up by 1. If you buy shares in companies profiting from the DAPL, you are ...


26

Yes. There are several downsides to this strategy: You aren't taking into account commissions. If you pay $5 each time you buy or sell a stock, you may greatly reduce or even eliminate any possible gains you would make from trading such small amounts. This next point sounds obvious, but remember that you pay a commission on every trade regardless of profit, ...


25

How do I achieve my savings goals? This question is the essence of personal finance. Whether the goal is to save for a down-payment on a house, retirement, or just an expensive toy (like a sports or luxury car) the first step is to define what you are trying to achieve and work backward from the big goal to see how much you have to set aside periodically to ...


25

There's really not a simple yes/no answer. It depends on whether you're doing short term trading or long term investing. In the short term, it's not much different from sports betting (and would be almost an exact match if the bettors also got a percentage of the team's ticket sales), In the long term, though, your profit mostly comes from the growth of ...


23

I am strongly skeptical of this. In fact, after reading your question, I did the following: I wrote a little program in python that "simulates" a stock by flipping a coin. Each time the coin comes up heads, the stock's value grows by 1. Each time the coin comes up tails, the stock's value drops by 1. I then group, say, 50 of these steps into a "day", and ...


23

I may be underestimating your knowledge of how exchanges work; if so, I apologize. If not, then I believe the answer is relatively straightforward. Lets say price of a stock at time t1 is 15$ . There are many types of price that an exchange reports to the public (as discussed below); let's say that you're referring to the most recent trade price. That ...


22

Buy low, sell high. I think a lot of people apply that advice wrongly. Instead of using this as advice about when to buy and when to sell, you should use it as advice about when not to buy and when not to sell. Don't buy when P/Es cannot support the current stock price. Don't sell when stocks have already fallen due to a market panic. Don't follow the herd ...


22

The problem with daily-rebalanced "inverse" or "leveraged" ETFs is that since they rebalance every day, you can lose money even if your guess as to the market's direction is correct. Quoting from FINRA'S guide as to why these are a bad idea: How can this apparent breakdown between longer term index returns and ETF returns happen? Here’s a hypothetical ...


20

Say we have stock XYZ that costs $50 this second. It doesn't cost XYZ this second. The market price only reflects the last price at which the security traded. It doesn't mean that if you'll get that price when you place an order. The price you get if/when your order is filled is determined by the bid/ask spreads. Why would people sell below the current ...


20

A "stock price" is nothing but the price at which some shares of that stock were sold on an exchange from someone willing to sell those shares at that price (or more) to someone willing to buy them at that price (or less). Pretty much every question about how stock prices work is answered by the paragraph above, which an astonishingly large number of people ...


19

There are several things to keep in mind: First, as Dilip's answer says, there are many indices, with different aims, so the number of "hot" stocks that someone would need to potentially target is much larger than your question suggests. Even if you can whittle this down to a small number of (potential) "core" targets, however certain an "anticipatory ...


18

So let's start from the beginning: Here's what we know: Currency can only be valued when compared to another currency. So each time you enter a position on a currency it is always relative to another currency. So the currency pair can actually be thought of as one unit. The first currency of a currency pair is called the "base currency", and the second ...


18

Re: A trader when buying needs to buy at the ask price and when selling needs to sell at the bid price. So how can a trade happen 'in between' the bid and ask? Saying the trade can happen "in between" the bid & ask is simplistic. There is a time dimension to the market. It's more accurate to say that an order can be placed "in between" the ...


18

EDIT: It was System Disruption or Malfunctions August 24, 2015 2:12 PM EDT Pursuant to Rule 11890(b) NASDAQ, on its own motion, in conjunction with BATS, and FINRA has determined to cancel all trades in security Blackrock Capital Investment. (Nasdaq: BKCC) at or below $5.86 that were executed in NASDAQ between 09:38:00 and 09:46:00 ET. This ...


18

In Canada, for example, they are expected or required to find out. They call it, The “Know Your Client” rule, part of which is knowing your "Investment knowledge and experience". They say it is, "to ensure their advice is suitable for you". I have always been given that kind of form to fill in, when opening an account.


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