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Know when dividends and stock splits occur
You can see at the bottom of the chart when a company issued a dividend and if there was a stock split.
- A dividend is when the company decides to give a portion of its earnings back to its shareholders. (Not all do. Some prefer to focus on growth). If you own the stock, you'll get some of the profit.
- A stock split is when more shares of stock are issued to the public. This is done to attract smaller investors or if the price isn't in line with competitors. For example, Apple did a 7:1 stock split, meaning you now have seven for every share you owned before the split.
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Stock trading tools
When you are practised at reading a stock chart, you might be looking for more powerful tools, such as:
- E*trade takes advantage of robust stock charts and trading tools. However, their pricing isn't the best.
- Robinhood. This app gives just enou...
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Learning to read a stock chart
A stock chart shows historic prices. It is useful when you can decipher what it's showing so you can make more accurate predictions.
- Identify the trend line
- Look for lines of support and resistance
- Know when dividends and stock spl...
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Buy stock on your own with Robinhood
The Robinhood app can make trading easier by analyzing stocks using the quick-to-open charts. Then, filter the chart from one day to five years' worth of performance.
Trades cost $0 with Robinhood if you wish to invest independently.
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Look for lines of support and resistance
Lines of support and resistance are levels at which the stock stays within over a certain period.
- A level of support is a price that a stock is unlikely to drop below.
- A level of resistance is one that it's unlikely to climb ab...
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Understand historic trading volumes
At the bottom of the chart are small, vertical lines. This is a trend of the volumes at which the stock is traded.
You should not only focus on volumes when you buy a stock. While there's not always a correlation, sometimes volumes can increase to shift the stock's price qu...
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Identify the trend line
It is essential to understand that stocks will take massive dives and make huge climbs. But it is best not to react to these huge drops or gains.
News will come and go, but pay attention to it when news coincides with a drastic change in the trend line.
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Investing in individual stocks
When you're new to investing, it is best to start with index funds or mutual funds. This will keep your portfolio diversified and reduce risk.
But if you want to move on to invest in individual stocks, a good first step is reading and understanding stock charts.
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The stock chart
A stock chart is a graph that shows the stock price over a specific period. Advanced stock charts will show additional data. The best website for basic stock information is Google Finance or Yahoo! Finance.
The series of letters after the c...
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How stock markets work
- A stock market is simply a place where buyers and sellers meet to sell shares.
- A share is a divided-up unit of the value of a company.
- Shares exist to boost profits of firms to turn a business into a financial success.
- Enter a stock market:...
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 letters tickets (KO for Coca Cola)
- NASDAQ - known for tech stocks like Apple. The tickets he...
What Is A Stock?
- A stock is a share of ownership in a company.
Ex: When I buy 100 shares of McDonald's, I become a partial owner of the company. I become a "shareholder."
- Stocks move based on the laws of supply and demand. If a lot of people want to buy a stock, the sh...
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