People always are interested in getting in the stock market but what do we really need to do it? Basic answer: Money-makes-money. There are several ways of playing the market t and two of them is making a business or just using it to earn extra funds for you. Many choose the latter as they don’t want to sacrifice getting unemployed just to give their full attention in playing the market. But some do..

First of all, one must consider that for him / her to play in the stock market, he/ she should have extra funds. By “extra funds” this means that the money set as money market cash or trading cash will not be needed for at least a year or more. The money put in the trading account (account used to trade under a brokerage firm online or manual) is something that is not necessary or is not vital to the owner. It should be considered as if the money is put in a long-term restricted time deposit wherein you can’t touch the funds until it is due (of course yield rates would depend on the owner and not on a fixed rate).

Next is, the trader, before getting into playing must at least have prospective companies the he / she wants to invest in. What is the point in putting your money in a trading account if don’t have a clue of what to do with it? At least 2 weeks or a month, the prospective trader must select a company that he / she want to buy for starters and monitor its movement for the period specified (Although reasonable analyses uses data those are usually more than 1 month). When the specific company is selected then the next thing to do is select a broker. It is more realistic of having a broker than trying to buy it from the issuing company. One must also consider choosing a broker that is online or the traditional “by-phone” trading. These days with the ultra fast pace of stock trading, it seems advisable to do it online rather than calling your broker to place an order. Although some people still find it more convenient to do so, I personally prefer online trading due to the benefits it has over the conventional trading (without prejudice to brokerage firms who still does “by-phone” trading). One basic advantage is one can instantly cancel and replace an order with just a click of a button with your computer. Another is the convenience of being able to transfer trading funds into the brokerage account by just posting an ACH deposit / withdrawal order which is done online also. And of course, one major thing is the benefit of having several online analytical tools as guides in your trading. Please send me an email at j_p_espiritu@yahoo.com if you want me to send you an invitation for my advised online brokerage firm.

Let’s now go to using the charts. As there are so many type of charts analysis existing I will just explain briefly on 2 useful charts. One would be the candle stick charting which shows the historical movement of the stock price over a certain period of time. Basically, it is called candlestick chart because the price movements of a day is shown like a candle. Sometimes is has a wick on the upper portion which represents high price movements or on the lower portion of the candle which represents the low movements of the price. Sometimes it doesn’t have a wick at all which means that the high or low is equal to is opening or closing price. For more information on candle stick charting please search for it on the net via google search.

Another useful chart is the MACD (Moving Average Convergence / Divergence) chart. This one shows two lines which represents a fast line (9 days) and a slow line (12/26 days) price movement average. Although this is one good analytical tool, one must keep in mind that this is only an indicator and the ultimate outcome may be different than what is predicted to happen. A very simple explanation for this is when the fast line is more than the slow line then it indicates a rally up of the price. Vice-versa is of course a rally down. The trader must look out for cross-overs of these two lines and decide on his / her move based on judgment.

There are many other useful analyses used by great traders and I would suggest for people who really wants to get playing the market, is that they do their own research and studies. One thing I learned is that you may have the money to spare but not knowing how to manage it is like putting it in a hole where it can get stuck for a long period of time.

I hope this will help those that are interested in playing the market. Just keep in mind that these are only guides I made based on my experience, research, and from my friends’ own experiences. I have personally tried these steps and I believe that they are worth doing to at least reduce the risk of losing money.