Stock Market Investors

Investing is much more than a numbers game, but you can’t get very far from numbers if want to understand what’s going on in the market. When you buy a share of stock, you are taking a share of ownership in a company. Collectively, the company is owned by all the shareholders, and each share represents a claim on assets and earnings. The most common ways to divide the market are by company size (measured by market capitalization), sector and types of growth patterns. Investors may talk about large-cap vs. small-cap stocks, energy vs. technology stocks, or growth vs. value stocks and Stock Tips, for example. Over the short term, the behavior of the market is based on enthusiasm, fear, rumors and news.

Most serious investors have a keen sense of their own risk/reward profile--their investment style so to speak. New investors on the other hand may be at loss in terms of finding and embracing a particular investment style. They've taken one look at their 401k, called their broker and said; "Um no thanks; sell, sell, sell!" Theirs is a resounding exit strategy and, for many more established investors it's either that or a steadfast sideline strategy. Well, that's no fun. You have to be in the game to win at the game.

The concept of position sizing is a very important, straight forward strategy that every trader should implement. Using the practice of position sizing will dictate the amount of money to allocate for a trade. The rule of thumb is to never risk more than 2% of your trading funds on any one position.