Knowledge of how the stock market works is one of the most important things for investors to improve their chances of being successful in the stock market.While many factors influence investors’ decisions to own certain stocks and not others, and those may vary according to the specific circumstances at any given time, in many cases it may be helpful for investors to develop an abbreviated list of topics or guiding questions, to make sure they are not forgetting to check something that may be relevant to their decision.That list of topics depends on each investor’s perception of what is important to look at in stocks before making a decision to wait, purchase, hold, or sell stocks. Examples of questions that could be included in such a list, helping investors pick the right stocks, are included below. Are the economic and socio-political trends in the country likely to favor or affect the long-term performance of the stock, and/or the economic sector in which the company operates?

Is the company a market leader in its niche? Are the current levels of growth likely to be sustained over time, and is the business doing something to gain a greater market share? What are the current market trends reflected in the major stock indexes? And are there technical indications of potential trend shifts in the market or in the price of the stock? Do the fundamental indicators like P/E, EPS, and debt indicate potential overpricing? If so, is there still room for substantial growth, enough to make sense to purchase it?

The price of stocks in the market fluctuates all the time, ultimately driven by supply and demand, as part of the constant movement created by the aggregated behavior of investors. However, new investors who adopt a long-term approach to investing, and include measures to manage the risks to their portfolios, would have a good chance of seeing their money grow over time.

Having an exit plan for the stocks considered for purchase is in many cases as important as the criteria guiding the decision to buy them. Defining the timing and/or circumstances when the stocks could be sold can prevent investors from making rash emotional decisions. How long is the stock planned to be kept before considering selling it? And, once bought, under what circumstances could this stock be sold before its planned time frame?

Options are derivative financial instruments that can be applied to different investment vehicles such as stocks, ETFs, bonds, currencies, commodities, and cryptocurrencies, among others. Considering the importance of options in a stock market investment strategy, understanding their basic characteristics can be helpful for investors to complement their investing strategies. options trading for beginners

While options trading is an extensive area of knowledge, the information in this article is expected to serve as an overview of the topic, addressing only the essential characteristics of stock options.