Stock Market Investing

Stock Market Investing Basics

For those of you who are new to investing in the stock market, let’s first review the function of the stock market itself.  The purpose of the stock market is two fold.  First, it provides a company with an efficient and liquid marketplace to raise capital for business expansion.  Secondly, it provides investors with the ability to buy and sell stock in companies which are traded publicly.  When you make a stock market investment, or become a shareholder, you are essentially taking an ownership stake in a company. 

Along with the bond markets, the stock market is the backbone of our economic system; without it, business would not have flourished as it has over the last 100 years.  The market provides quick access to capital for companies who would otherwise have to go out and find this capital on their own.  In a perfect world, it is a circular machine which allows the general public to invest in the stock market; thereby, allowing companies to expand operations and grow their profits.  These profits should eventually roll back down into the pockets of the shareholders through share price appreciation and/or dividend payments.  Over the past 100 years, stock market investing has yielded the highest return amongst any asset class available to investors. 

Stock Market Investing Options

While every country has their own stock markets, there remain 3 major exchanges on which the majority of US equities are traded.  In order of size, they are the NYSE, Nasdaq, and AMEX.  Each exchange has its own set of guidelines which govern membership on the exchange.  These strict requirements are put in place to provide the trading community the confidence to keep investing in the stock market with an assurance that they are not buying into fly by night companies.

Over the past 10 years, there has been innovation in the stock market.  With the creation of ETFs & ADRs, the marketplace has enhanced its stock market investing options to the public.  Through ETFs, investors are provided with all the features of an index based mutual fund; however, without all the heavy expenses and lack of liquidity.  ETFs can be traded like any other stock, rather than only at the end of the day as mutual funds are.  ETFs have added a completely new dimension to the stock market investing community by providing access to investments in asset classes other than equities.  For example, there are bond, commodity, and even currency ETFs.  It is very important that you consider these options when formulating an investment strategy.  For those of you who are learning how to invest in the stock market, ETFs are a great trading vehicle.  They allow you to diversify your assets into different asset classes and carry a lower risk profile than individual stocks. 

ADRs, or American depository receipts are yet another option available to those who want a broader variety of stock market investing vehicles than just the typical US based company common shares.  ADRs represent shares of foreign companies which trade on the US exchanges.  These companies go through a strict screening process, similar to US equities, and allow investors access to international markets without the need to expose themselves to currency risk.

Learn How to Invest In the Stock Market

If you think you’re ready to start investing in the stock market, has an expansive educational archive of articles to help you learn the ropes of the market.  Our stock trading education center will teach you about the basics of investing, review online trading in detail, and provide many stock market investing strategies that you can to get started with your education.

If this is your first time here, you will quickly learn that this site is heavily focused on technical analysis, day trading and options trading.  To get your feet wet, get started in our technical analysis education center to learn about the different patterns and concepts we present there.  There is a whole section dedicated to candlestick charting techniques as well.  If you feel ambitious, move on to our day trading center which has cutting edge day trading strategies that you won’t find anywhere else.  Finally, our option trading center will provide you with a solid understanding of options and also cover the many different options strategies that you could use to invest in the stock market.

Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...
Day Trading Simulator provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for...

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