We may receive compensation when you click on product links from our partners. For more information, please see our disclosure policy.
Did you ever play a game of monopoly? You buy properties, make deals with people, and try to financially crush the other players. Well, this is pretty similar to what happens in real life online. The primary difference between these two games is that Monopoly money isn’t actually worth anything… but it can be traded for a prize! In a stock market, your cash can be converted into actual products and services. Let’s take a look at how exactly trading works. You can also visit VectorVest for more ideas and tips in trading.
While trading isn't an easy thing to do, it can be done with some patience. It's important to understand the way the market works before you consider making any trades. If you're prepared then there is nothing stopping you from becoming successful!Click To TweetBuying a stock
A stock is a little bit like a piece of a company. When you buy a share in a company, you are investing some money into it so that the owner of the company has some extra cash to work on his business. So when you own a certain percentage of a company, you are called a shareholder! Now, for example, let’s say that someone wants to sell us one share in a particular for $1. You can then go ahead and buy them or not. If you had bought several shares of apple during its early days, they would’ve been worth millions by now! But this is how companies make a profit. For every “share” they have out there (in reality, most companies don’t actually sell shares, they sell a company’s stocks), a certain percentage of the money you spend on them will go to the owner.
How a stock works
When a company releases a new product, the market value increases because more people want to buy it! But when a company’s product doesn’t sell too well, this leads to a decrease in stock prices. If something bad happens to a company (like a scandal or some lawsuits), then there are usually very negative changes in stock prices for this reason. When you want to buy a certain share from a certain company, it’s considered purchasing that share at its current price. News is key here – if an investor hears about something good happening with the company they invested in, they will most likely start buying shares. Not only because it’ll benefit their business, but also because a company’s stocks will rise in price as a result of a rise in demand. In a similar fashion, if a lot of investors hear about something bad happening to a certain company, they could all sell their shares and the stock price could decrease.
Selling shares
Selling a share is a bit different from buying one. Buying a share means you’re investing money into a company that you think has potential! Selling a share doesn’t really mean that you’re “selling” it for profit (like with Monopoly). Rather, it means that due to some recent good or bad news about the company out there on the streets, its value might have increased or decreased! When you want to sell your stock before someone else does, it’s a good idea to sell at a higher cost than what you bought it for. If a stock price has increased by a certain amount, selling it for a profit is a good thing.
Day trading
Currently, a lot of people are participating in a stock market that is based on technology. This means a stock’s value can increase or decrease extremely quickly. The time frame for this to happen is usually a single trading day which can last a maximum of 6 hours. You can also start day trading with $1,000. It’s because a trading day isn’t a real-time game – all transactions are executed in steps called “trading ticks”. The reason for this is that if a stock changed hands in a mere second, then the prices would not be very accurate!
Many companies have a limit for how long you have before you would have to put your stocks up for sale. You should check out a chart to keep track of how a stock has been changing for days/weeks. If there is news about a company you’re invested in, it may be a good idea not to sell your shares right away! Keep an eye out on what happens with the company and decide whether or not it would benefit you to continue holding onto them.
Swing trading
The swing trader holds onto a stock for a few days or weeks before selling it. Sometimes swing traders try to catch falling knives, which means buying stocks whose value has dropped significantly in hopes that they’ll bounce back up soon. The idea here is very similar to a day trader’s, except that a swing trader waits a bit longer than a day to sell their shares. This is a common method used by a lot of people who are almost exclusively interested in trading, but not in the stock market. The reality is that a lot of starting traders tend to lose a bit when it comes to making money! If you’re still interested in keeping track of your stocks, I’d recommend checking this website out.
While trading isn’t an easy thing to do, it can be done with some patience. It’s important to understand the way the market works before you even consider making any trades. Like most things, buying and selling have their pros and cons, but if you’re prepared then there is nothing stopping you from becoming successful!
This book is for those of you who are just starting to consider trading Forex but don’t know where to start, given the abundance of information on the internet.
