Expert Opinion

Although the stock market is mentioned on the daily news almost everyday, many people don't really understand how it works. While it's virtually impossible to accurately forecast which way stock prices will move on a regular basis, the basic concept behind the stock market is fairly simple. Once you get past the technical jargon like splits, margins, indexes, and predictors, you'll be surprised at the common sense rules that the stock market follows.

A stock represents a share of the company. To create a simple example, assume that Company A has divided their company into 100 shares of stock. If you purchase one share of Company A's stock, you own 1% of the company. Stock prices represent the value of the company. If each share of stock is worth $100, then Company A has a total worth of $10,000.

The biggest source of confusion about the stock market comes into play when someone tries to understand why stock prices rise and fall. In most cases, stock prices remain fairly stable. However, when conditions become apparent that make investors think that the stock is a good investment, they tend to buy more of the stock. When the opposite happens, and they feel the company is in trouble, they tend to sell more of the stock. Because prices are a direct result of supply and demand, prices drop when more people are selling, and they rise when more people are buying.

Many investors who have become rich by trading stocks have done so because they are skilled at judging the market and industry trends. Although this is a risky proposition, they have profited by buying stocks at bargain prices and selling them at their high point right before the prices begin to drop. The typical investor should rely on the advice of a financial consultant to create a diversified portfolio instead of trying to play the market like an expert, but here at stockprices.com we are dedicated to give you the latest stock market trading data along with a platform where you can communicate with experts in the field to give you the best chance to succeed in today's economic climate.