A Beginner's Guide to the Stock Market - Deepstash

Investing is not magic. Remember that ...

  • most people don't invest at all
  • 75% of new traders quit within the first 3 months. 
  • 90% of new traders quit within the first 6 m...

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A Beginner's Guide to the Stock Market

A Beginner's Guide to the Stock Market

by Matthew R Kratter

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Stock Exchanges

It's where shares in companies are traded. The most important ones are:

  • NYSE (New York Stock Exchange) - known for "blue chip" stocks like Coca-Cola . Companies here are identified by 2 ...

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Every stock has a bid price and an offer (or "ask") price. “You sell to the bid, and you buy from the ask.”

When you are buying a stock, you can use 2 different kinds of ord...

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An index is simply a collection (or "basket") of stocks. An ETF allows trading an index just like a stock. The best-known indexes are: 

  • S&P 500 (trading as SPY): the 500...

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Wayne gretzky - Hockey player

 I skate to where the puck is going to be, not where it has been

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Active vs Passive Investing

Active investing strategies means picking your own stocks and building and managing a portfolio. It's hard and few people do it well. 

Passive investing stra...

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Dividend Stocks

A dividend stock will usually make a cash payment into your brokerage account every 3 months. Works well as you can take the cash from a dividend payment and use it to buy more dividend stocks. 

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Popularized by investors Benjamin Graham & Warren Buffett, value investing is about buying something for less than it is worth. It's based on this idea that you can find undervalued companies (comp...

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P/E Ratio (Price per Earning)

Let's say that a company's stock trades for $100 and that the company has earnings per share (EPS) of $6.50 over the last 12 months. 

We can calculate a trailing ("last 12 months") P/E ratio ...

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Great companies that are rapidly growing will always trade at high P/E's (Facebook, Amazon etc). Value investors will always tell you to stay away from companies with high P/E's. Ignore them. 

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Find stocks with the following characteristics: 

  • price at 52wk highs or new all-time highs
  • stock is trading above its 50day moving average and the 50day moving average is above ...

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Get out:

  • when a stock moves up 100% in 2 weeks or less
  • when you are up 300% from your entry price
  • when all of your friends and CNBC begin to talk a lot about it
  • w...

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Risk no more than 1% of the trading account on each stock trade. 

Let’s say that I am trading a $100,000 account. I will risk only 1% of my account, or $1,000. If I enter the stock at 100...

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  1. Don’t buy stocks that are hitting 52-week lows. You are most likely catching a falling knife. 
  2. Don’t trade penny stocks. They are mostly scams.
  3. Don’t short stocks. You will pro...

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