Remortgaging can save you money but beware of the fees !

Make Money Stock Trading
 
The basic principles of how to make money on the stock market is easy enough to understand. You buy stocks in a company at $X then later on you sell them stocks for $X + $Y. If you don't like paying tax then use a spreadbeting firm.

Putting this basic principle into practice is rather more complicated. First of all, you can't really trust anyone. Stock market tipsters frequently get it wrong. Experts often make their money by selling their 'expertise' rather than trading stocks. Company directors are imaginative when it comes to stating their company's prospects. Technical analysts, disagree with each other, and they can't all be right.

But you have to start somewhere.

There are 2 basic methods for stock picking - technical analysis and fundamental analysis. Fundamental analysis means analysing what a company does, reading its accounts, deciding if its stock price is cheap or expensive and then buying the stocks or not. This is what Warren Buffett does and he has become a billionaire by doing it. If you have the time you can in fact just follow what Warren Buffett does and buy the same stocks that he does - you can see which stocks he is invested in here.

Technical analysis is used more by short and medium-term stock traders  - using a time frame of anything from a few days to a few months. It involves interpreting stock charts and buying stocks when certain levels are reached and then selling them when you have made the profit you were intending to make (or selling them qucikly if they start  going down instead of up).

Why do people use stock charts in stock trading ? Basically because stock charts are a reflection of human behaviour. A stock price will rise for no obvious reason then a few days later some announcement is made. The conclusion is that some people knew what was going to happen before it happened and acted on that news.

Stock charts also cause people to act even when there is no news. When a stock reaches a certain level people will sell for the simple reason that a certain level has been reached thus creating more selling and a self-fulfilling prophecy. If you are a beginner to stock trading and have no desire to really understand the fundamentals of every company you may invest in, then you really owe it to yourself to understand the basics of stock charts. Professionals use them all the time so you are at a disdvantage if you don't know how the professionals are likely to react to certain situations.

As a stock market beginner the first thing to understand are the concepts of support and resistance and moving averages. Moving averages show the average price of a stock over a given time period. The 200-day moving average is particularly important. If a stock falls below its 200 day moving average then this is interpreted by many people as a clear sell signal, which of course drives the price down.

Support and resistance levels are the levels at which stocks fall or rise to before turning round. This is known as trending and many traders make a living by buying at the bottom of a trend and selling at the top. They then wait for the stock price to fall back to the bottom and start all over again.

Some traders say they only ever use support and resistance levels to tell them when to buy and sell. 

Finally, if you are going to be a swing trader, then another basic rule to apply is to never buy a share if the 5-day moving average is heading down.

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