Investing in the stock market is very complicated and can be quite risky if you don't know what you are doing. It is not prudent to simply pick a stock to invest in by deciding if you like the company name or not. You should research the company before you risk your money. Some basic facts you should learn about any company you want to invest in are included in the companies prospectus which you should read thoroughly before spending a dime. 1) Revenue. This refers to the amount of money the company makes. Although some companies that are still in the early development stage have no revenues to offer, many of the companies that have been in the market for years make use of the revenues to cover some losses and other costs. 2) Earnings. This refers to the money the company makes. Aside from revenues, the earnings are the money that would not be used in covering expenses. These are the extra money the company makes. Companies with large earning have an advantage in the stock market because investors examine the earnings made by the company they are about to buy stocks on. 3) Debt. This refers to the money the company owes in many ways. Because the company is in debt, the money they have is for paying up for the debit alone. Buying stocks from these companies would be risky because of the instability of the company. 4) Property. This refers to all the assets (money, stocks, and all businesses they own) of the company. Knowing these assets could give you an understanding of the company's position in the industry. If the companies have significant properties in their hands, you could safely trust their background and

immediately buy some of their stocks. 5) Financial responsibility. This refers to the account of the companies that they need to pay out. Meaning, if the value of their financial obligations are low, the company is not in danger of becoming in debt. Examining the company's liabilities and comparing it with its assets could help in determining if you are ready to buy stocks from them. Make sure that the assets of the companies are always higher than the financial responsibilities they need to make. Once you have researched a company, there are a couple of different methods of investing. You can of course, buy the stock and wait for it to go up but what if the company isn't public yet? This means there is no stock to buy until their IPO or initial public offering. This marks the transition of a company from a privately owned firm to a public held firm. Every incorporated business issues stock, although initially, to a few stockholders. In order for a company to raise capital without incurring debt, one way is to sell stock to the public. You can make money from an IPO in two ways. The first is to get in early and buy a bunch of shares hopeing for a quick increase then sell it off for a huge profit. The other is to watch and wait. See if a stock is fairly priced. If it's reasonable, grab the stock. Shorting Stocks or selling short is an advanced technique that is very risky. Short sellers look for the best stock to sell. Short sellers sell stock they don't actually own with a belief the value will come tumbling down in the near future. When the price drops, they can buy the stock at the lower price, pocket the profit

and return the shares to the owners. It is very risky because if the price goes up instead of down you will lose money and tis no way to easily speculate if a stock will fall. So the potential for loss is greater than the potential for profit. Margin Trading uses borrowed money to increase how much stock you can buy. You can open a margin account with a broker, but again this does have a lot of risk. If you were to buy a stock worth $1,000 without the use of margin trading, you would have to dish out the $1,000 dollars. But if you margin trade, your broker can lend you half of the amount or $500 and you only need to shoulder the other $500. If the stock gets you $10 per stock, profit will be based on the number of stocks you bought with $1,000. Then you can pay the broker back. If you did not margin trade, your profit would only have been for the number of stocks you could have initially afforded for $500. Of course, if the stock does not profit you will owe the broker the difference plus any fees. It's never safe to gamble your money away on some company you don't even know or try trading techniques that you are not familiar with. The basics of the stock market lie on the companies' background. Make sure you research to ensure your money is in the right hands and remember, the greater the profit, the greater the risk. About the author: Lee Dobbins writes for For Your Wealth where you can find out more about your money and wealth. Visit their article archive for more articles on investi ng in stocks.

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