What are stocks? Publicly traded company issue stock in units of shares. For example if a company issues 30 million shares, and you have 1 million, then you own a 30th of the company. If that company is Microsoft, you probably won't be reading this because you can afford to have 100 tutors explain anything you want to know while dining on champagne and caviar in your villa in Monte Carlo. This stock gets bought and sold and an alarming rate, for big companies, stock gets bought and sold in the order of seconds. The idea is that by issuing and selling stock, a company can get lots of investment money in order to expand, and you get to reap the benefits of their growth by now being a part owner in the company. That's a great idea, but has very little to do with understanding the day to day behavior of a stock, as the dot-com bubble proved. Companies like RancidDogFood.com sprouted up with absolutely no possibility of profitability, but they were traded on NASDAQ and behaved just like profitable companies did, at least for a year or two. The point is, with stock market investing, there are two extreme positions that are taken. The Warren Buffet approach, which is eminently sensible, that takes the long term view. Choosing the underlying profit-making-potential of a company is Buffet's approach. You buy and hold, and if you've chosen wisely, do so for years. At the opposite extreme, are the day traders and technical analysis types that believe that they can predict the market in the short term. They'll buy and sell stocks, maybe trading every second, minute, hour or day. They hope to make money by buying low and selling high. And many believe that they can, mostly to their own detriment as we'll soon see. Although a good thing in many ways, stock trading also preys on people who share the same weaknesses as gamblers.