Why stock prices move the way they move? Why the price of one commodity falls when the price of another one rises? Why one country changes its fiscal policy when there are rumors about recession in another country? How interest rates are determined? Is there a relationship between the Gross Domestic Product (GDP) and the S&P 500 index? Economics tries to answer these, and many more, questions.
So, what is economics? Economics is a social science that studies the production, allocation, and use of goods and services, and analyzes how these resources should be optimally distributed among the individuals. Economics are divided into two broad categories: macroeconomics and microeconomics. Macroeconomics is the study and analysis of the economy as a whole, whereas microeconomics focuses on how individuals, firms and industries make decisions. These two categories are essential in understanding most economic phenomena.
Economics is based on human interaction and decisions. Individuals, most of the time, try to use their resources in order to improve their well-being. The decisions they make about the consumption of goods and services, or the amount of time they devote to work or leisure, or the fraction of their wealth that will be used in investments, affect their well-being and individuals, acting rationally, try to make decisions that maximize their prosperity and happiness. As an individual, for example, you have limited recourses with which you want to fulfill your needs. Therefore, you will spend part of your budget on food, clothes, rents, etc. Then you might use the rest to fulfill secondary needs, such as buying an ice cream, investing in a stock, etc. Microeconomics analyzes the choices you make and how these choices affect yourself and other individuals.
Macroeconomics, deal with business cycles which are comprised by economic recessions and expansions among other things. A recession is a general slowdown of the economic activity. During recessions, economic indicators such as GDP, consumer confidence, industrial production fall, while the unemployment rate rises. An economic expansion on the other hand, is an increase in the level of economic activity. The economic indicators now, move in the opposite direction than before. Macroeconomics analyzes such fluctuations in aggregate economic activity.
New investors ask the question: why some investors have bigger profits than others? Successful investors base their investment decisions on superior information. Economy is a living thing and the investor has to dive in the vast ocean of information with the right tools, in order to make the most successful decisions. Optimally, stock traders should combine macroeconomic information with company related data because the state of the economy is probably the most important determinant of stock market performance. In more formal settings, active portfolio managers use models to predict the stock market direction which are based on macroeconomic information and forecasts.
In the Economics section we will study the most important economic indicators, which are the tools that every investor has to have in his arsenal in order to understand the state of the economy and consequently decide about his investments in such a way to improve his stock trading performance.
StockTradingCollege.com, Stock Trading and Investing for Beginners
So, what is economics? Economics is a social science that studies the production, allocation, and use of goods and services, and analyzes how these resources should be optimally distributed among the individuals. Economics are divided into two broad categories: macroeconomics and microeconomics. Macroeconomics is the study and analysis of the economy as a whole, whereas microeconomics focuses on how individuals, firms and industries make decisions. These two categories are essential in understanding most economic phenomena.
Economics is based on human interaction and decisions. Individuals, most of the time, try to use their resources in order to improve their well-being. The decisions they make about the consumption of goods and services, or the amount of time they devote to work or leisure, or the fraction of their wealth that will be used in investments, affect their well-being and individuals, acting rationally, try to make decisions that maximize their prosperity and happiness. As an individual, for example, you have limited recourses with which you want to fulfill your needs. Therefore, you will spend part of your budget on food, clothes, rents, etc. Then you might use the rest to fulfill secondary needs, such as buying an ice cream, investing in a stock, etc. Microeconomics analyzes the choices you make and how these choices affect yourself and other individuals.
Macroeconomics, deal with business cycles which are comprised by economic recessions and expansions among other things. A recession is a general slowdown of the economic activity. During recessions, economic indicators such as GDP, consumer confidence, industrial production fall, while the unemployment rate rises. An economic expansion on the other hand, is an increase in the level of economic activity. The economic indicators now, move in the opposite direction than before. Macroeconomics analyzes such fluctuations in aggregate economic activity.
New investors ask the question: why some investors have bigger profits than others? Successful investors base their investment decisions on superior information. Economy is a living thing and the investor has to dive in the vast ocean of information with the right tools, in order to make the most successful decisions. Optimally, stock traders should combine macroeconomic information with company related data because the state of the economy is probably the most important determinant of stock market performance. In more formal settings, active portfolio managers use models to predict the stock market direction which are based on macroeconomic information and forecasts.
In the Economics section we will study the most important economic indicators, which are the tools that every investor has to have in his arsenal in order to understand the state of the economy and consequently decide about his investments in such a way to improve his stock trading performance.
StockTradingCollege.com, Stock Trading and Investing for Beginners