The Basics of Trading

Arguably the best long-term investment is in the stock market. Whether you have hundreds of thousands to put into the hands of the economy, or just pocket change, over time you should see positive results. While some stocks are going to be much more volatile than others, in past years the market has shown many more positive annual returns than it has negative. With updated technology mobile trading platforms, trading has become easy enough for even those without a financial background to take part in. Even if you already have a broker you’re loyal to, odds are they’ve adopted some sort of online real-time trading platform in the form of a smartphone app. This type of automation gives you the power to invest right at the tips of your fingers. Before making any financial decisions however, you should perform some due diligence and understand where your money is going and what you can expect from making the decision both short-term and long-term. Below are some of the basics of the stock market.

Basics of Trading

What Exactly is the Stock Market?

This might be somewhat of a difficult concept to grasp for those who don’t have a background in finances or large corporations. In short, the stock market is a system where publicly traded companies issue shares (small pieces of equity in their company) where the public can then buy and sell them. It’s not exactly gambling, because while you are betting on whether a certain company is going to perform well or not, there’s not a huge chance of you losing all of your money. The stock goes up and down based on financial and public relation performance, and you have the ability to sell or buy more at any time. With mobile trading platforms, you can keep track of how much stock you own in each company, a great account management feature.

What Makes A Stock Go Up & Down?

If you’ve ever studied macroeconomics, you’d know that things in not only the financial world but also overall society are connected in intricate manners. At some level, the stock market works the same way. Things like risk, supply, demand, alternatives, competition, negative/positive press, lawsuits, scandals, politics, and meeting/missing financial goals can all play a role in the price of a stock. Sometimes the company may be doing very well, but the overall economy doesn’t have that same luxury. In this case, the price may go down simply do to harsh times on consumers. This is why some investments are better left for the long-term. If you utilize a mobile trading platform, you will have access to real-time stock prices that can help you make a decision on whether to buy, sell, or hold.

How Are Stocks Valued?

Stock valuation is pretty complicated, but it begins with equations relevant to market activity and the finances of the company heading towards an IPO. From there, investors compare the stocks price to its fair value. Generally, you’ll by the stock if the fair value is more than its current trading price. Calculating a company’s fair value is pretty complicated, therefore we leave it to the professionals. Mobile trading platforms typically provide you with up to date information on the stocks, which can help you make better investment decisions.

When Should I Buy/Sell?

There’s really no good answer to this because the stock market is always changing. Historically, the best time to buy is when others aren’t. This event might be tough to distinguish, because if everyone else is hesitant, it will definitely make you think twice about the risk. Logically, companies that do well will see their stock price increase overtime. Therefore, if you buy when the price of the stock drops, you’ll increase your return when it goes back up again. It’s important to do research on the company however, because the stock price might be going down because they’re going bankrupt. In that case, you could hit $0, and all of your investment is gone. If it’s a flourishing company however and we’re just in a bearish market, low prices are good (long-term).

Due diligence is key to investing your money wisely. Mobile trading platforms are becoming more and more popular due to their real-time prices and updated information.

Deepak

After working as digital marketing consultant for 4 years Deepak decided to leave and start his own Business. To know more about Deepak, find him on Facebook, Google+, LinkedIn now.

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