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Basic share tips for beginners to trading

Posted on August 12, 2010
Filed Under Investment, Self Help | Leave a Comment

The Stock Market has two main divisions for investment for the beginner to learn about. You must be prepared to invest time in studying the exchanges that occur every day in the Stock Exchange. Your initial time investment will be worthwhile and may prevent you from making serious losses later.

The two markets

The primary market is the risky market for trading shares and not for the fainthearted. New companies, with new share capital requirements and with precious little known about them are very much a gamble when their shares are first issued. Massive profits can be made but they are few and far between. Some investors reserve a small percentage portion of their portfolio for the primary market (which is exciting in a dour portfolio).

The biggest market is the secondary market which is the market for shares already issued and is main area where people invest. Dividends are paid on your investment as long as you hold the shares and it is possible to derive a good income from shares held in called the larger, more stable companies.

Buyers and sellers – Sellers are the companies who need cash investment and the buyers (investors) are people like us, looking for an investment opportunity. As an investor you are buying a stake in the firm, so do some research before you buy shares belonging to that company. The best place for information is in the company’s annual report which will give the details of its performance over the year. In addition, you will need to become familiar with terms such as the Dow Jones, NYSE, FTSE and NASDAQ to name but a few. Don’t rely on share tips which are often written by journalists and are old news before you read them. Note too, that many journalists are not market analysts. Use your own intuition combined with the advice of a respected analyst to make your dealing successful.

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