Stock trading in the most uncomplicated definition is simply buying low and selling high. However, this principle is easily said than done due to the complexity of the market behavior.
Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. You've probably seen pictures of a trading floor, in which traders are wildly throwing their arms up, waving, yelling, and signaling to each other. The other type of exchange is virtual, composed of a network of computers where trades are made electronically.
Buy low and sell high is the ultimate guide to successful stock investing. It is also the reverse of what many investors do.It’s not that investors start out to do that, but too often, they use price, and in particular price movement, as their only signal to buy or sell.Stocks that have gone up recently, especially those with a lot of press, often attract even more buyers. This obviously drives the price up even higher.
People get excited about what they read and see and want a part of the action. They jump into a stock that is already trading at a premium – they buy high.
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