Planning To Invest In Stock Market?? - Read This Before You Do

When you get to know about the importance of investing in stocks then you will get a reason to invest. Generally, the stocks have offered the most potential for growth. It is observed that the U.S. stocks have consistently earned more than any bonds for the long term. In spite of daily ups and downs in the prices of stocks, they have earned more. For this reason, , stock mutual funds, or ETFs, is very important if you are saving for retirement or other far-off goals.

Following are some of the ideas that you must be familiar before making your first buy:

· It is significant to know and learn the definitions of metrics like the P/E ratio, earnings per share, return on equity and compound annual growth rate. You must know how they are calculated. You must also be capable of comparing different companies using these metrics.

· It is important to know how "fundamental" and "technical" analyses are performed. You must also know the difference between them. Also understand where each is best suited in a stock market strategy.

· Knowing the difference between market orders, limit order, stop market orders, stop limit orders, trailing stop loss orders, and other types is very important. They are commonly used by investors.

· It is good that you know about the cash accounts that are most common but you must also know about the margin accounts that are required by regulations for certain kinds of trades. It is important to understand how margin is calculated and the difference between initial and maintenance margin requirements.