Basics of Stock and Trading for Beginners

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by Joanna Marie, Negosentro |  For those who aren’t familiar with the stock market, it can initially seem like a very confusing place. However, once you know what you are working with, you will realize that it operates a very efficient exchange process. Nowadays, the trading of stocks actually involves a very minimal amount of human interaction, and can actually be done over the internet, which is why the platform is so easy for anyone to use. If you are looking to make an investment through the trade of stocks, and are looking for some more information to get started, here are a few basics that you might find useful to get you going.

What is stock trading?

The term ‘stock trade’ simply means to buy and sell company stocks and shares. The aim of stock trade is simple: to make as much money as possible by investing in different companies. This can be done by buying shares at a lower price, and then selling them once the price of the stocks has increased to give you a healthy profit. Alternatively, you can hold onto your shares for a prolonged period of time and make your money through receiving the interest and dividends from your stock. The more shares you hold, the more money you can stand to earn. However, this also comes with increased risk.

How are stock prices set?

Share prices change based on the market climate, and this can be affected by a variety of factors. One of the most influential factors is simply the supply and demand of the stock: if there is an increased interest in those looking to buy stock in a certain company (for example, if the company is doing particularly well or making new technological advancements) and fewer shares available on the market, then the stock prices will be higher. However, if there is a rush for people to sell, such as if a company is in decline or losing profits, and very few people interested in buying, then the stock prices will be lower due to there being such low demand.

How can you predict market trends?

Stock markets can, unfortunately, be unpredictable because it is impossible to determine every factor that can contribute to the success or decline of a company. However, there are different methods to be used which can predict the outlook of company shares over a short period of time, based on their past trends. For example, learning how to use Ichimoku cloud indicator is a great way to gauge the outlook for trends. You can then make smarter investment choices based off of the predicted trends, and decide when the best times to buy and sell stock would be.

What is the first step in investing?
To start investing, the first step would be to find a stock broker. This is a person or company which is licensed to buy and sell stocks and shares on the market on your behalf. Luckily, a lot of brokers are now accessible online, which makes the investment process that much easier.