Success In The Stock Market (part 1)

Success in the stock market is only for the few who really want the work (not the glory), and the problem is to ascertain, with the minimum expenditure of time and money, whether you are fitted for the stock market.

These, in a nutshell, are the vital questions up to this point:
• Have you technical knowledge of the stock market and the factors that move it?
• Have you $1,000 or more that you can afford to lose in an effort to demonstrate your ability in the stock market?
• Can you devote your entire time and attention to the study and the practice of the stock market?
• Are you so fixed financially that you are not dependent upon your possible profits, and so that you will not suffer if none are forthcoming now or later?

There is no sense in mincing words over this matter, nor in holding out false encouragement to people who are looking for an easy, drop a penny in the slot way of making money in the stock market. Tape reading is hard work, and those who are mentally lazy need not apply.

Nor should anyone to whom it will mean worry as to where his bread and butter is coming from. Money worry is not conducive to clear headedness. Over-anxiety upsets the equilibrium of a trader more than anything else. So, if you cannot afford the time and money, and have not the other necessary qualifications, do not trade in the stock market. Start right in the stock market or not at all.

Having decided to proceed in the stock market, the trader who is equal to the foregoing finds himself asking, "Where shall I trade?" The choice of a stock market broker is an important matter to the tape reader. He should find one especially equipped for the work: who can give close attention to his orders, furnish quick bid and asked prices, and other technical information, such as the quantities wanted and offered at different levels, etc. of the stock market.

The stock market broker should never have so much business on hand that he cannot furnish the trader with a verbal flash of what "the crowd" in this or that stock is doing in the stock market. This is important, for at times it will be money in the pocket to know just in what momentary position a stock or the whole stock market stands. The stock market broker who is not overburdened with business can give this service; he can also devote time and care to the execution of orders.

Let me give an instance of how this works out in the stock market: You are long 100 shares of Union stock, with a stop-order just under the market price; a dip comes and 100 shares sells at your stop price - say 164. Your careful, and not too busy stock market broker stands in the crowd. He observes that several thousand shares are bid for at 164 and only a few hundred are offered at the price. He does not sell the stock, but waits to see if it won't rally. It does rally. You are given a new lease of life.

The stock market brokers handling of the order may benefit you $50, $100 or several hundred dollars in each instance, and is an advantage to be sought when choosing a stock market broker. Having knowledge of the depth of the market – how much is offered for sale and at what price and how much is bid and at what price; the placement of bid and ask orders are of tremendous importance to the tape reader.

The brokerage house which transacts an active commission business for a large clientele is unable to give this type of service. Its stop-orders and other orders not "close to the stock market," must be given to stock market specialists, and the press of business is such that it cannot devote marked attention to the orders of any one client.

In a small brokerage house, such as we have described, the tape reader is less likely to be bothered by a gallery of stock market traders, with their diverse and loud-spoken opinions. In other words, he will be left more or less to himself and be free to concentrate upon his task.