This is second in my "How To Make Money In The Stock Market" series of articles. Search for "Learning the Stock Market" to find the first article which lists the entire set. How to make money in the stock market - overview, Here you'll find a general overview based on commonly asked questions. What is the stock market? The early New York Stock Exchange started as a group of men trading beneath the shade of a buttonwood tree in New York City.
This bears little resemblance to today's computerised global markets but the principles remain the same. Stock represents ownership of a piece of corporation. You can choose to buy a piece of a corporation for many reasons and equally you may choose to sell your piece. This buying and selling of stock takes place in the stock markets where buyers and sellers come to make these exchanges in return for money. In a free market, the price a buyer is willing to pay or a seller is willing to accept is entirely discretionary.
You can set your price and cannot be forced to buy or sell at any other price. What are the benefits of owning stock? The main reason for investing in stock is for your money to grow in value over time relative to inflation. Historically stocks have proved to be more profitable than bonds or other instruments but this must be taken in context with time. During any short period stocks have the potential to lag other investments but over the long haul history shows there is no better place for individuals to invest than in the stock markets. Dividends on individual stocks are also a benefit. Consider them just that - a benefit but not the main return. Your main reason to invest in stock is for your capital to grow and so choosing a stock on the basis of potential dividend may actually lead to a significant loss of capital if the stock price declines.
Who makes money? In terms of the trading values, theoretically professional traders ought to be making money but the sad fact behind the statistics is that the majority of professional traders and fund managers do not make decent returns for their investors. This is why more people are choosing to handle their own investments but if the professionals can't do it what hope do you as an individual have? Much! There are restrictions upon professional traders and difficulties associated with trading huge accounts which do not apply to individual investors. The effects of these can make massive differences in returns. As you learn more you'll understand that you are in the best position to take responsibility for trading your own personal capital and will undoubtedly reap far greater returns than leaving it to others. Is it easy?! The $1,000,000 question! Is driving a car easy? Sure - when you know how!
But if you had 20 different people telling a beginner how to do it and each with a different opinion it could prove difficult and dangerous. In fact many may even give up before mastering the controls. So goes it with trading. You want to avoid jumping from strategy to strategy. Trial and error on several get rich quick schemes can soon leave your pockets lighter. The markets have been around for more than 200 years and operate on the same emotions now as then. Instead of trying to beat them quickly into giving you money, learn how they operate and what repeatedly drives successful stocks to the top.
Take the time necessary to truly learn how to reliably, safely and sustainably make money in the stock market. That's the key to true financial freedom. It doesn't need to take years but it does require careful study and application. Hope you found it informative reading this over view of how to make money in the stock market. To read the next article in this Learning the Stock Market series simply search for Bill Benson or USA Stock Market.
This bears little resemblance to today's computerised global markets but the principles remain the same. Stock represents ownership of a piece of corporation. You can choose to buy a piece of a corporation for many reasons and equally you may choose to sell your piece. This buying and selling of stock takes place in the stock markets where buyers and sellers come to make these exchanges in return for money. In a free market, the price a buyer is willing to pay or a seller is willing to accept is entirely discretionary.
You can set your price and cannot be forced to buy or sell at any other price. What are the benefits of owning stock? The main reason for investing in stock is for your money to grow in value over time relative to inflation. Historically stocks have proved to be more profitable than bonds or other instruments but this must be taken in context with time. During any short period stocks have the potential to lag other investments but over the long haul history shows there is no better place for individuals to invest than in the stock markets. Dividends on individual stocks are also a benefit. Consider them just that - a benefit but not the main return. Your main reason to invest in stock is for your capital to grow and so choosing a stock on the basis of potential dividend may actually lead to a significant loss of capital if the stock price declines.
Who makes money? In terms of the trading values, theoretically professional traders ought to be making money but the sad fact behind the statistics is that the majority of professional traders and fund managers do not make decent returns for their investors. This is why more people are choosing to handle their own investments but if the professionals can't do it what hope do you as an individual have? Much! There are restrictions upon professional traders and difficulties associated with trading huge accounts which do not apply to individual investors. The effects of these can make massive differences in returns. As you learn more you'll understand that you are in the best position to take responsibility for trading your own personal capital and will undoubtedly reap far greater returns than leaving it to others. Is it easy?! The $1,000,000 question! Is driving a car easy? Sure - when you know how!
But if you had 20 different people telling a beginner how to do it and each with a different opinion it could prove difficult and dangerous. In fact many may even give up before mastering the controls. So goes it with trading. You want to avoid jumping from strategy to strategy. Trial and error on several get rich quick schemes can soon leave your pockets lighter. The markets have been around for more than 200 years and operate on the same emotions now as then. Instead of trying to beat them quickly into giving you money, learn how they operate and what repeatedly drives successful stocks to the top.
Take the time necessary to truly learn how to reliably, safely and sustainably make money in the stock market. That's the key to true financial freedom. It doesn't need to take years but it does require careful study and application. Hope you found it informative reading this over view of how to make money in the stock market. To read the next article in this Learning the Stock Market series simply search for Bill Benson or USA Stock Market.
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