A wide range of stock market data, important for analysis in the decision making process, becomes readily available through the use of computer software that has been specially designed to meet the needs of investors and stock traders.

Both past and present

Just about everything that has occurred in the past regarding stock prices and trading volumes can be depicted in a graphic form called the stock chart.

By means of lines and bar graphs, the stock chart provides a visual display of a massive amount of numerical financial data that summarizes stock price changes over periods of time throughout the past. Today, with the aid of computers and computer networks, stock charts can be updated almost instantly to show the changes in stock prices and trading volumes as they occur every minute of every trading day.

The following stock chart, showing six months of action of the S&P 500 large cap index, provides significant information of value to the trader who knows how to interpret it. The last 30 days of price and volume that depict several levels of support and resistance is certainly of interest and noted by traders and professionals in the stock market.

Computer software allows almost instant updating of constantly changing trading activities that are watched by millions around the world in real time via the internet. In the days before computers, information such as this would await the publication in daily newspapers to become accessible to the general public.

Such up to the minute information is valuable and essential information, especially for the stock trader because the trader works with a far shorter time horizon than does the longer-term investor who tends to follow the buy and hold approach.

Stock market software, a versatile tool

As well as recording the basic information of price and volume, stock market software can provide a wide range of data for interpretive and analytical purposes. There are popular programs that can provide specifically tailored output, based on variable criteria defined by the individual trader, which can list stocks with particular attributes. Such attributes can indicate a buy or sell condition on which the trader can base a decision to commit to a trade.
There is also an abundance of computer software available to support training programs and instruction on every aspect of trading in the stock market, from stock market basics to sophisticated technical analysis.

Stock selection sources

There are many proprietary commercial programs that enable the selection of qualified stocks in which to invest or trade, such programs are usually available at a cost of monthly, quarterly, or yearly subscription fees. There are also many of that are free and open source and, for those who are sufficiently computer literate, can be modified to suite an individual trader’s requirements.

Among the hundreds of such programs, examples of some the wider known are:
Vector Vest, Worden TeleChart, and INO’s Market Club.

Programs such as these can be immensely helpful to beginning investors and traders who wish to manage their own portfolios. Most of them provide general instruction in stock market matters in addition to the specialized uses of their own specific proprietary software.
Software programs are indispensable tools for actively trading in the stock market. The vast amount of existing data and the new information generated each day can only be made available through the use of stock market computer software, the days of sifting through the daily stock prices listed in the pages of the Wall Street Journal that many of us grew up with are relics of the past. Professional trading nowadays cannot be done without the use of computers and software programs.

Stockbrokers are regulated professional organizations that act for their investor clients in buying and selling stocks, options, bonds, and other financial securities and are the necessary link between the stock exchanges and investors.

Stockbrokers can be categorized as either full service brokers or discount brokers, the main difference being the extent and depth of the services they provide and the much greater cost to do business with full service brokers than with discount brokers. Some of the latter can be considered as deep discount brokers.

For the purposes of this website which deals with stock market basics, we can focus on the discount brokers and more specifically the online discount brokers where most of the trades for the retail market take place nowadays. Much of today’s stock market trading is performed by “small” traders, persons personally directing their own trading activities and not relying greatly on a wider range of broker services that are available if required.

The dollar value and volume of the so called retail segment of the stock market is small compared with that of mutual funds and institutions that account for probably 80 percent of all trading, and where some of their trading volumes can move markets, that is, significantly affect the price of stocks in the market.

For beginners, in their early days in the stock market, a service of value could be the virtual trading (also called paper trading), or stock gaming resources offered by some brokers to support the education and learning process. And there are many other educational opportunities and tools offered by brokers to learn about the many aspects of investing and trading.

The main thing is to be aware of the cost of making a trade, it does vary somewhat between brokers but because of the fierce competition to acquire clients in a shrinking client base the costs seem quite reasonable and many discount brokers now provide research and software trading tools that can be a great help as the investor becomes more knowledgeable, beyond the “basics” level that is.

Some brokers require a minimum deposit to open an account and some require a minimum balance to be maintained – but not all do so.

Also, to know the full costs of making transactions and maintaining a brokerage account, it is important to know whether there are additional costs for providing reports, statements, or any other such “bookkeeping” services normal to doing business. Some brokers are adding such fees as a means of boosting their incomes while discounting their commission charges for making a trade.

Listed below are a few well-known stockbrokerages and some details on fees and opening balances. For a much more extensive summary and assessment of stock brokers, check here for the Smart Money 2010 Broker Survey.

http://www.smartmoney.com/investing/economy/smartmoneys-annual-broker-survey-23119/

Start early, set aside funds on a regular basis

That’s easy to say and it’s good advice, but for many young people, early in their careers, it is not really a priority. When it does become a priority, as it inevitably will, it may have been left rather too late, but as they say, better late than never.

And the retiree may have a family and other responsibilities that require a continue income stream. So many of us who are now retired have found out that we should have made better plans to take care of ourselves, the government’s Social Security is not enough to provide all of the comforts we have become accustomed to and we have had to make serious adjustments in our retirement years.

When getting closer to retirement, nearly everyone worries about having enough money to do so. Some people are lucky enough to be among the few that enjoy the safety of a pension, however, that is not always the case. Today, more than ever, you must be prepared to take your retirement planning into your own hands and make provisions for yourself and your spouse. It may not be a simple task and it helps if you have the right foundation of knowledge or know where to go and who to consult to obtain the necessary advice.

There is a need to set financial objectives, to decide what methods to use to achieve them, and to make a master plan to be followed, This might be best done with the aid of a professional financial planner who is familiar with a wider range of possibilities to achieve the established objectives.

Do this and you will be well on your way to a successful retirement. But do not just totally rely on anyone without being fully informed yourself on what actions are being taken. You need to be familiar enough on matters to be able to make your own judgments on the value and credibility of any advice you receive and commitments you are making.

Objectives for retirement
The first step is to determine your goals for retirement and then determine your income needs in retirement. Many people think they will need less money to for living after they retire, but the fact is that most people tend to spend more with their new found abundance of time. Try to project your expenses in retirement.

To gain some idea of what the costs of retirement might be in the future, there are some internet resources which have calculators that can help determine the  amount of money that needs to be saved each month to reach the set objective when the time arrives.

What methods to use to meet the objectives
The next step is to determine what the best investment methods to use. Deferred tax plans such as 401k and investment retirement accounts, IRA’s, can be very good if available from your company, especially if the company contributes matching funds.

If your company does not offer a retirement plan then you may want to turn to an IRA or a Roth IRA. Most investment companies make it very easy to open an IRA and will give you sample portfolios that can be matched with your age.

Once you have your plan in place remember to stick to it. Markets go up and down, however, overall the long-term trend is up. In any long stretch of time there will be periods when stock markets fall so there is a need to be prepared for that eventuality and a firm plan of what to do should a significant market downturn occur while you have money invested in the stock market.

Even professionals in finance and accounting lose money in those times so you need to be personally paying attention and ready to act should things get drastic. You may have to cut your losses but you also need to know when and how best to do so. When markets fall, don’t panic but be ready with a plan to act in defense of your savings. So many in the past have lost so much through waiting it out or waiting too long.

If you have the expertise or have access to the right advice, market collapses can be viewed as great buying and selling opportunities. That takes a lot of “know-how” but many fortunes have been made in such cases.

In conclusion
Many people do not consider retirement until it is drawing near. If you start investing at a young age you should have more than enough to retire on and it will require smaller amounts in the beginning when you are young. Money invested will have a longer period to compound.

Set you objectives, determine which investing vehicles and methods are right for you, and stick to the plan you have formulated.

Do all of that and you can rest more easily with the reassuring knowledge that you can enjoy a fruitful retirement when the time arrives.

The objective of this website is to provide answers to the questions:

What does a beginning investor or trader want to know?
And need to know?

Recent articles can be accessed from the Recent Posts list in the column to the lower right →

And click here for the complete LIST of TOPICS (46 posts) and categories (6).

RECENT FEATURE SERIES: (Started November 05, 2010  to January 2011)
Starting Anew, Steps to Learning Stock Market Basics – Post No. 1, November 05, 2010

Now 14 posts as of January 24, 2010

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A Note of Introduction to this Website:

The term “stock market basics” encompasses an extremely wide range of subject matter and it will be a challenge to provide the full scope of information that can meet the needs of every visitor to this site who is seeking an explanation for a specific topic – but we will make a serious effort to do so.

The “how and the what” -  to get into action

A visitor may be wishing to become an active participant in the market action and want to know how to trade or invest and what to trade or invest in. Therefore, the information provided here is meant to cater mainly to that group of would-be traders or investors.

To answer frequently asked questions, some articles on the Stock Market Basics website will provide a reasonably full and appropriate explanation and for some others we will provide specific links to other internet websites where more detailed explanations or informative data can be found.

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First things

If a newcomer to the field has not established a brokerage account, doing so will be one of the first priorities.  It requires filling out a standard application to the brokerage house of choice. The application requests some basic financial information and the nomination of the type of trading anticipated. Usually it does not need a lot of capital to open an account

For our discussions here we will assume that trading will be done online with an online discount broker as opposed to a full service broker, meaning that the investors will make their investment and trading decisions without advice from the broker. However, many discount brokers do provide research, training courses and other tools to assist in the decision making process. A description of both full service brokerages and discount brokerages can be found at Stockbrokers for Online Trading.

Problems with brokers can arise

But it is only fair to say that annoying problems do arise in dealing with brokerage houses and you, the customer, must be diligent in checking and following up transactions. You can become aware of what to look for by reading on the internet the complaints of other investors, this will alert you about what to be prepared for. Check out stock market forums, they are where you might find discussions about broker related experiences and opinions, good and bad.

The cost of making a stock transaction differs among brokers, so we suggest checking a few to determine the rates and the services and tools they offer. Some brokers to check out are:
E-Trade, TD Ameritrade, Scottrade, Charles Schwab, OptionsXpres, Zecco, TradeKing, thinkorswim, Options-House, trade MONSTER, MB Trading. And there are many others, this Stock Market Basics website urges all would-be traders to always take the time to check for additions to such lists which are usually compiled from memory and will inevitably overlook other worthy institutions.

For Website links to some online brokerages see the link provided above.

A little background – The Stock Market

The stock market is the umbrella term used to describe all the activities related to the buying and selling of shares of companies and the buying and selling of other financial instruments such as bonds, futures, options, and other derivatives, sometimes also described as securities.

There is no single particular location, but it defines the environment of trading activity between buyers and sellers occurring throughout a network of institutions that facilitate the exchange of money and equity ownership. In most countries, trading activities take place under the jurisdiction of institutions called Stock Exchanges, some of which are fully housed in buildings while others substantially operate by the electronic means using the online capacity of the internet.

The internet plays a significant role in all trading, providing quick access free of charge to trading platforms and a wide range of essential stock data and information sources.

Wall Street

In the United States we commonly refer to the marketplace as “Wall Street”, which is the location of the New York Stock Exchange and is also the historic site of many other financial institutions. But there are also many stock exchanges in other American cities and almost all countries in the world have their own stock exchanges and their own similar regulations. The stock market has a global presence and stock exchanges throughout the world are connected in a way similar to that in which different banks are connected, enabling inter-bank and inter-stock exchange activities possible, essential for international commerce and finance.

What is a Stock Exchange?

A stock exchange is an institution that provides the physical and electronic resources and the manpower to enable stock market transactions to take place between buyers and sellers during specific hours on business days.

The stock exchanges set rules and regulations that must be strictly adhered to by the companies and the brokers that are associated with the exchange.

Not all stock transactions take place on a stock exchange and the securities of companies that are traded on an exchange must be appropriately qualified and meet certain requirements. Companies that are traded on a stock exchange are classified as “listed” and those that are not traded on a regulated stock exchange are categorized as “unlisted”. The unlisted companies are sold “Over-The-Counter” (OTC).

In the United States, the stock exchanges and other trading organizations are governed by the rules of the federal government’s Securities and Exchange Commission (SEC). Among its many oversight activities, the SEC is responsible for the regulation of the securities markets and for the protection of the interests of investors.