Beginner Tips on Stock Market Trading
Have you ever seen the faces in the Forbes’ list of wealthiest people on the planet? Most if, not all of them, have stocks in the stock market and they’ve owned pretty much some shares in notable public and private corporations. Not only that, they also owned personal stock broker in Malaysia.
Stock market trading is actually easy if you are equipped with the right knowledge, that is. If you want to learn how to do it, then be sure to read the entire article.
1. What is a Stock?
To know what exactly it is that you’re getting into, you have to know what a stock is. A Stock, also known as a Share, simply represents your ownership with a particular organization. For instance, if you have 1000 shares on Disney, it means that you have owned a part of the popular franchise.
There are two types of stocks: Common and Preferred. Common Stocks are shares that represent your legal ownership with a company. This is what people refer to when it comes to investing.
Preferred Stocks, on the other hand, is considered a hybrid in the sense that it has some features that are usually not present in a common stock. This includes the ability to get dividends at specific times and in the event that a company is deemed bankrupt, they will be given a higher priority when it comes to financial recovery.
2. How Do You Earn Money?
Well, the basic premise of stock trading is that you invest in shares of a particular company and you have to hold it for as long as possible until you get a much favorable trade.
Holding the stock for a longer time would mean that you get your money through dividends and interest. Interest can compound the longer you hold them, which means that you’re going to earn more money as the years go by.
3. Investing in Stocks
There are actually four ways you can invest in the stock market. One popular choice would be to through a brokerage account, but there are also other options such as investing through a 401K plan or the different IRAs.
4. Why is the Stock Market Dynamic?
Well, the prices increase or fluctuate depending on the ebb and flow of the market. And that movement is caused by the different traders.
Think of the stock market as an auction where there is a seller with potentially many buyers. Those buyers will only acquire stocks based on a price that is favorable to them. To that extent, a particular stock’s price can go up or down depending on the demand.
5. Understanding Dividends
Once you’ve acquired some common stocks, you will be paid some dividends by the company. That is actually one way you can earn money.
But, how does this actually happen? When a company earns profits, they will have the choice of giving dividends to its shareholders. This can either be in the form of cash, property, or even special one-time dividends (which is rarely given).
Now that you know the basics of stock trading, it is now up to you to make things happen. Start by getting a good stockbroker and analyze the market until the situation is favorable to you.