What are the benefits of trading on the USA stock market?
Primarily it comes down to availability of figures and transparency of accounting methods. Which there may be sniggers or even angry remarks made in reference to this but the basic truth is that despite occasional failures in the system, the USA has the most stringent rules over publication of facts and figures by corporations in the world.
More importantly for you "the personal investor" this information has to be made publicly available every 3 months. The type of reliable, historically relevant data that you need to make the best decisions when choosing stocks is put out on a plate for you every 3 months. You just need to learn how to access it and what to do with it.
There is little need to look beyond the US markets -the USA has the largest free market economy in the world. We are global leaders in virtually all industries and the vast majority of all leading technological developments are produced by US companies or companies traded on the US markets. If you look at trading in other markets you find this vital information is either not publicly available or not frequently enough published to be of practical value.
I don't live in the USA - which markets should I trade?
Regardless of where in the world you live you can benefit from trading the US markets by accessing this smorgasbord of reliable data. In the UK for example companies are only required to produce annual reports. This is of little or no practical value in assessing a company's stock value and future prospects in time to make an investment decision.
Does it matter what the overall market is doing?
Yes - absolutely.
This is the first line in your decision making. You need to know exactly what the market is doing and how it influences the movement of stocks. It is not a difficult skill to acquire, although often shrouded in mystery and distorted by sensationalism the media.
In a bear market even the most outstanding stocks will struggle to achieve anything close to their potential. 3 out of 4 leading stocks will fail to even retain a move.
The top market leaders will break out and start their dramatic advance within the first 12-16 weeks of a new bull market rally - most will move within the first 4. You therefore want to know exactly when that turn happens. If you're early you'll likely loose money but if you're late you'll loose out on the most fabulous opportunities to make massive gains.
The important thing to observe is the volume action within the markets. A false rally will not have the right sort of volume support to sustain the move. You'll also often find that in the days & weeks leading up to the turn your watch list will be growing and accumulation will show itself in the volume action of your individual leading stocks.
Watch the main indexes; the S&P 500, the NYSE, the Nasdaq and the Dow Jones top 30. Study the action at the tops and bottoms of previous market turns and see the relationship between rallies or crashes and volume.
This single skill - that of learning to read the markets, may be the most vital and effective aspect of your trading knowledge. Is the economy important when trading? The markets lead the economy - not the other way around. Just look at historical market charts for the proof.
Typically the markets turn 6-8months before the economy so just as public opinion is at it's worst and economic statistics are as black as can be, you need to be watching for the turn. Don't rely on CNN to tell you!
Hope you found it informative reading about the USA stock market. To read the next article in this Learning the Stock Market series simply search for Bill Benson or Growth vs Value Stocks.
Learn to earn. More free lessons and educational resources are available at http://www.howtomakemoneyinthestockmarket.net.Primarily it comes down to availability of figures and transparency of accounting methods. Which there may be sniggers or even angry remarks made in reference to this but the basic truth is that despite occasional failures in the system, the USA has the most stringent rules over publication of facts and figures by corporations in the world.
More importantly for you "the personal investor" this information has to be made publicly available every 3 months. The type of reliable, historically relevant data that you need to make the best decisions when choosing stocks is put out on a plate for you every 3 months. You just need to learn how to access it and what to do with it.
There is little need to look beyond the US markets -the USA has the largest free market economy in the world. We are global leaders in virtually all industries and the vast majority of all leading technological developments are produced by US companies or companies traded on the US markets. If you look at trading in other markets you find this vital information is either not publicly available or not frequently enough published to be of practical value.
I don't live in the USA - which markets should I trade?
Regardless of where in the world you live you can benefit from trading the US markets by accessing this smorgasbord of reliable data. In the UK for example companies are only required to produce annual reports. This is of little or no practical value in assessing a company's stock value and future prospects in time to make an investment decision.
Does it matter what the overall market is doing?
Yes - absolutely.
This is the first line in your decision making. You need to know exactly what the market is doing and how it influences the movement of stocks. It is not a difficult skill to acquire, although often shrouded in mystery and distorted by sensationalism the media.
In a bear market even the most outstanding stocks will struggle to achieve anything close to their potential. 3 out of 4 leading stocks will fail to even retain a move.
The top market leaders will break out and start their dramatic advance within the first 12-16 weeks of a new bull market rally - most will move within the first 4. You therefore want to know exactly when that turn happens. If you're early you'll likely loose money but if you're late you'll loose out on the most fabulous opportunities to make massive gains.
The important thing to observe is the volume action within the markets. A false rally will not have the right sort of volume support to sustain the move. You'll also often find that in the days & weeks leading up to the turn your watch list will be growing and accumulation will show itself in the volume action of your individual leading stocks.
Watch the main indexes; the S&P 500, the NYSE, the Nasdaq and the Dow Jones top 30. Study the action at the tops and bottoms of previous market turns and see the relationship between rallies or crashes and volume.
This single skill - that of learning to read the markets, may be the most vital and effective aspect of your trading knowledge. Is the economy important when trading? The markets lead the economy - not the other way around. Just look at historical market charts for the proof.
Typically the markets turn 6-8months before the economy so just as public opinion is at it's worst and economic statistics are as black as can be, you need to be watching for the turn. Don't rely on CNN to tell you!
Hope you found it informative reading about the USA stock market. To read the next article in this Learning the Stock Market series simply search for Bill Benson or Growth vs Value Stocks.
It can be confusing and daunting to know where to start but there are some outstanding free resources available to help you on your way to independent financial security. I'll also show you where to find the best and most cost effective paid products to support you in your progress.
As for me....I've lived in different countries around the world and enjoy traveling. That's the beauty of trading - you can do it from anywhere in the world that has a connection!
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