Should You Trust A Stock Trading Forum?
Stock trading forums, found almost exclusively on the internet, offer a free opportunity to exchange information with other people of all experience and skill levels.
Technical Analysis
One of the most popular topics at these stock trading forums is the "technical analysis" of the stock market. This manner of playing the stock market assumes that non-random price patterns and trends exist in markets and they can be identified and exploited.
Fundamental Analysis
This process involves analyzing the financial health of a company by looking at its financial statements, competitive advantage, competitors, and markets. The prediction of how the stock will move is based on the company's fundamentals and valuation.
Financial Markets
The financial markets provide the best location for the purchase or sale of "instruments." These markets also guarantee liquidity, establish asset prices, and reduce the expenses that are incurred while operating in the financial markets. For the person that is new and trying to learn about these instruments, it always works best to break the markets down to their basics. The financial markets can be broken down into two separate entities; the stock market and the market of promissory notes.
Promissory Notes
The most popular stock trading forums on the internet do not include much discussion of this instrument simply because a majority of people do not trade in it. These notes are simply promises of one person to pay back another person at a predetermined time and interest rate.
Types of Stock
(1) Blue Chip - These are shares of large companies having a stock price history of profit and growth, annual return in excess of $4 billion, significant capitalization efforts, and a stable record of paying off dividends. These giants of the stock market include Nike, Intel, Microsoft, and Nokia. Many stock trading forums discuss these giants.
(2) Growth Stocks - As the name implies, these are shares in companies that tend to grow faster. The reason for this is the management teams pursue the policy of reinvestment of revenue into further research and development and capitalization of the company's assets. These companies rarely pay dividends.
(3) Income Stocks - Made up of companies with high and stable earnings that pay excellent dividends to the shareholders. Mutual funds hold a majority of these types of stocks.
(4) Defensive Stocks - These stocks, even under the most severe financial conditions, will remain stable. Food, oil, and utilities remain strong and stable because the demand remains stable no matter the economic times.
You may find the free information you receive at the stock trading forums on the internet very useful. Remember there is no guarantee that you will make money so only use money you can afford to lose.
