2012: Advent Trading: Where to start?

by on December 11, 2012

The White Rabbit put on his spectacles. “Where shall I begin, please your Majesty?” he asked.
“Begin at the beginning,” the King said gravely, “and go on till you come to the end: then stop.”
(Alice’s Adventures in Wonderland, Chapter 12)

BARC.L 10/12/2012 -> 11/12/2012

Good advice if ever one should need it.

The image (left) shows Barclays (BARC.L) traded on the London Stock Exchange (LSE).

Within this series, we’re going to cover the very basics of what a stock market is and then a brief interlude into why price movements occur.

We’ll cover each of the different instruments and what they are in real life.

We’ll then move onto how to predict price movement using two of the common price-movement indicators: Relative Strength Index (RSI) and Stochastic Oscillator.

Finally we’ll look at trendline analysis and how the past repeats itself, despite this being a chaotic system.

To begin with, a stock market is a place where people can trade financial instruments (jargon: ‘symbols’). Markets are created by supply and demand, so although there are individual markets for example; The London Stock Exchange (LSE) and New York Stock Exchange (NYSE), if you trade shares then you’re likely to go through a broker who will also be conducting their own individual markets, these are commonly referred to as ‘Market Makers’. Every market maker is a broker, not every broker is a market maker.

Each financial instrument has a unique symbol that identifies it the world over which consists of its name, and the exchange it’s commonly traded on. For example: BARC.L is Barclays Bank (BARC) traded on the London Stock Exchange (.L). AAPL is Apple traded on the New York Stock Exchange ( American symbols don’t have a suffix ).

However, there are many financial instruments that can be traded and we’ll cover these in later segments.

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