A beginner’s guide to trade the stock trading
The investment industry consists of many trading platforms like the Forex market, cryptocurrency, crude oil trading, and many more. The stock market is an aspect of this investment industry where interested people or organizations can invest their money by buying the shares of other financial organizations. This market is the second-largest liquid market in the world after the Forex market and has gained a name for itself due to the vast opportunities it provides to participants.
If you are someone who is looking for the perfect platform to invest your capital and get some money out of it, then you should have a look at the stock market. Each day, over $200 million is traded here creating opportunities to earn for many people. So, in this discussion, we will focus on the prospects you have when you enter the stock market to give you a clearer idea about this market. Let’s begin!
What is the stock market?
This is a market where investors buy shares in different companies and sell them on for a profit. Someone who invests in this market is known as a stock trader. Now, every company sells its shares at a fixed price. But due to price fluctuations, the price varies, and based on that, the shareholders can make a profit. So, what triggers this fluctuation? The main reason behind the price fluctuation is supply and demand. When the demand for any shares increases, the value of those shares increase, making it more lucrative for investors and giving them an opportunity to make profit.
A company requires a huge amount of capital to carry out all the necessary functions. But it is not always possible for owners to meet all these needs due to a shortage of investment. That’s why they tend to sell shares of their company in the share market where the investors can take a look at all of their financial policies and invest in buying their company’s stocks. In turn, the money they get from investors is used to grow the organization. Based on that, investors can make a profit. To start your stock trading career right now, visit the site of Saxo and get a real account. It will provide you with all the necessary tools to buy stocks of major assets when you expect them to rise or fall. Let’s cite an example to show you how traders make their decision.
Assume that company X has 50 shares worth $1 million. That means each share would cost $20,000. Then, if investors find it profitable to invest in this company, they would invest their money and buy stocks based on their capital. A stock trader can buy more than 100 shares or less than 1 share; it completely depends on how much he is willing to invest. So, if the value of the company rises over a period of time, you can easily make a big profit by selling the shares you purchased.
How do investors make a profit?
One of the many common questions of people regarding this industry is how to earn money in this industry. You cannot expect to make money in this industry as fast as you could in the Forex market as the price fluctuation is much less here. So, stock investors are always investing on a long-term basis to make a profit here. There are two ways of making a profit on this platform.
- The first way is to buy stocks at a lower price and selling them at a higher price. As we have mentioned before, the stocks of a company are mainly sold at a fixed price. But due to many factors like geopolitical situation or natural disasters, the price of those stocks may increase. For example, if there is an outbreak of a disease, the price of pharmaceutical stocks may increase hugely. Then people who had previously bought shares in those companies can sell their stocks at a high price in the market and make a profit.
- The second way of making money is the dividend profit. It is the method where the investors get a portion of the profit the company has made. If a company, after getting the investment of investors, makes a profit of $2 million, then all its investors will receive an amount of profit following their investment.
Now, stock trading is a much safer industry and doesn’t have high risk like the Forex market. But an investor needs to hold onto stocks for at least five years to make a profit in this industry. So, if you are looking for a long-term trading opportunity, the stock market or investment business can be an excellent option.