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Today, the securities of various enterprises continue to be the leading exchange-traded asset used for active speculation. The answer to the question of how to make money on stocks is a whole science that is learned in the community of theory and practice. However, several basic rules increase the probability of successful transactions. Knowledge of these patterns and techniques is the basic platform for a successful trader’s career.
Introduction to the General Theory of Securities Trading
Like all stock market segments, this market is influenced by many objective factors. Trading stocks for beginners and experienced traders is an unavoidable risk, not to take into account which means dooming yourself not an imminent defeat. Therefore, you should immediately pay attention to the following events that can significantly change the dynamics of even the most stable quotes:
- important news of the world economy and politics;
- reports of central banks and Employment committees of the leading powers;
- fluctuations in the exchange rates of leading currencies;
- mergers, acquisitions, expansion, release of new models, increase in the trading range, development of new directions by enterprises whose shares are in the trading portfolio;
- annual report of the company whose securities are taken into operation;
- intentionally distributed “insider” information – false rumors, news, analytics, designed to reduce the value of specific shares;
It should be understood that the stock market is the most mobile conjuncture that can inflate the price of shares to the sky or vice versa – turn them into ordinary paper. Therefore, before you start buying such assets, you must immediately determine the following circumstances:
- investment terms-you can buy shares of a large company and keep them for 10 years, receiving dividends and considering such an operation as a long-term investment of extra money. And you can buy and sell dynamic assets every day, anticipating the movement of quotes and getting regular profits on the difference in the exchange rate;
- the amount of investment that you are willing to lose without fatal financial and moral trauma in the event of a complete collapse;
- the nature and scope of the risks you are willing to take in the pursuit of profit. This is a very important point, since you can earn a little with almost zero risks, and you can put everything on the line and burn out once and for all; best broker to invest in stocks
- the right choice of the best trading platform with a small commission and a good reputation with the best broker to invest in stocks. Today, many large intermediaries between exchanges and traders offer free training programs and various bonuses;
- develop an individual strategy for specific stocks. In this world, you can not rely only on luck, or play “blindly”. It is necessary to carefully study the behavior of security over long periods, comparing global events or industry news with changes in the quotation. Based on this analysis, you need to build your action plan, be sure to determine the upper and lower limits of the course at which you need to close the position;
Today, trading stocks online, as at all times, requires the trader’s unflappable composure and the most accurate calculation. It is clear that with active daily trading, it is very difficult to eliminate the emotional factor. But if you strictly follow the plan, success will become a permanent component of your work.
How to make money on stocks?
- Diversification. You should never invest large sums in the shares of a single company, no matter how reliable they may seem. There are periods when the securities of many giants of the industry, the gaming industry, and the communication sphere fall in price. Therefore, it is worth dividing your finances into several portfolios with shares of selected companies. This will help compensate for the local loss with the profit from another profitable position.
- Contracts for the difference in prices. CFD contracts are differential trades that allow you to make a profit if you correctly predict the movement of the quote in a specific period. In this case, you do not become the real owner of the shares, which is especially convenient for Russian traders. At the same time, you can use fairly large leverage. You will be in profit if the asset price rises, and in loss, if it falls. Remember that large leverage plays on your side only if the exchange rate rises, and quickly ruins you in the event of an incorrect forecast.
- Call and Put options. The most popular derivatives grant the right to buy shares in the future at a fixed price. The duration of such contracts is limited, and the seller of options in all cases receives a premium from the buyer. The Call option allows the trader to earn on the growth of quotations, and the Put option on the fall of the exchange rate.
Always remember that even a small profit is better than any loss. Therefore, you should give preference to small but stable returns than risky large contracts. The most reliable stocks are the securities of enterprises included in the stock indexes SP 500, Dow Jones and NASDAQ in the United States, Nikkei 225 in Japan.
Popular stocks of today
- Apple Computer, Inc (AAPL). A leading company for the production of mobile devices and software applications. The constant evolution of the iPhone, iPad, and Mac models, complemented by new revolutionary ideas, guarantees a decent profit for the brand, accompanied by the inevitable growth of the stock. The success story is complemented by such promising solutions as the Apple Watch and AirPods, which have formed a fundamentally new direction in mobile communication. Indexed by the S&P 500 and NASDAQ. The stock pays a dividend – the average for all years is 38 cents apiece.
- Amazon.com. Incorporated (AMZN). Member of the NASDAQ 100, S&P 500, and S&P 100 indices, NASDAQ Comp. The largest online retailer of the Global network, working in all areas of advanced communication technologies. A steadily growing portfolio of securities designed for short-term and long-term investments. On short positions, you can play both on the increase and the decrease. The average annual return on shares is 18%. The ever-growing profit of the project allows shareholders to look confidently into the future.
- Facebook (FB). The main index and place of purchase and sale of shares is the NASDAQ stock exchange. The leading company in the segment of social networks and communication applications. The holder of a part of the share package of this project is Bill Gates himself. After the 2018 report, stock prices soared by 12%. The estimated growth potential of the exchange rate is 24% in 2019. The average quarterly dividend is $1.4 per share.
- Google Inc (GOOG) is the Internet’s most profitable project, an international search engine with an impressive line of applications and related products. The securities of this leading enterprise cover all the leading indexes-NASDAQ 100, NASDAQ Comp., S&P 100, S&P 500. In five years, the share price has more than doubled. No dividends on the securities have yet been paid.
- Microsoft (MSFT) is a legendary computer software developer who was at the forefront of the industry. An impressive line of constantly updated products ensures the company’s steady profit growth. To work with stocks, you need access to the US stock exchange platform NASDAQ. On securities, dividends are paid in the amount of 2.65% of the yield.
How to increase the probability of success in Forex trading
- Choose a reliable, trusted broker with an impeccable professional reputation. A good brokerage company offers its clients a wide range of free training programs, powerful information and technical support, free access to leading trading platforms, loyal commissions, and generous bonuses.
- Do not rush to make deals for real money. After you have mastered the basics of trading and become familiar with popular exchange instruments, practice as long as possible on a demo account. Remember-the risks of real money are always associated with emotional overexcitation. Therefore, try to develop a calm, confident behavior in any situation during training.
- Always keep track of the influence factors mentioned above. Try to keep abreast of the opinions and strategies of leading analysts and leading successful traders. Collect meaningful information from all available sources, eliminating unverified rumors.
- Analyze market behavior based on previous stages and similar situations. Study charts that allow you to understand how an asset behaves from a historical perspective.
- Use all the tools and options of trading platforms correctly. Don’t ignore any function or utility. Constantly improve the level of knowledge and expand your horizons in the direction of studying all the features of the stock market.
Never treat Forex trading as a game, even if you love excitement and thrills. Check your every step, using the knowledge you have gained and proven information. Be sure to master the options that allow you to control open orders remotely.
And some more useful tips
Stock trading is not a lottery or a roulette game. In this business, calculating, cold-blooded players survive, who constantly keep the situation under control. Today, most brokerage terminals offer traders a wide range of tools that allow them to control and close positions at the right time. However, successful traders constantly monitor the market situation, making the necessary adjustments promptly in manual mode.
Securities trading is a responsible and serious activity that requires careful preparation and honed practical skills. Do not rely on luck-the exchange is not a casino, and you can lose here much faster. Therefore, if you decide to trade stocks, options, or CFD contracts, work first with a demo account to hone the necessary techniques without risking real money.
