Overview
The general stock market that you know from the news (NASDAQ, Dow Jones, NIKKEI, DAX, ASX, etc.) lists titles of shares of companies. These shares of the companies can be bought and sold within the rules of each stock market. It is regulated and therefore a quite trustful environment for trades and business. To buy a share of any company you must go through a broker. That is somebody who has direct access to the market and finishes trades. Mostly it is all electronic these days and you can just sit at your computer. But this means as a private person you cannot just go to the market and take part. You need to pay fees to your broker and then the trade can be executed. Also, there must be shares on offer in order for you to buy some, just like in any other market with products. Your aim with taking part in the stock market is based on bets & outcomes. I would like to show some basics and some scenarios how you can invest in this market.
Basics
You must have money to take part. I cannot recommend taking loans and buy stocks with money that doesn’t belong to you. The ups and downs of the prices in this market can easily make you bankrupt or worse.
You must be patient. Once you have bought a stock you must have the ability to wait. If you believe this market can make you rich quickly, then you are quite wrong. There is a chance, but this depends mostly on luck. If you don’t know what you are doing there is almost a 100% chance that you will lose money.
Know the difference between investing and trading.
Keep an eye on it. You need to constantly check what you have bought, why you have bought it and why you still have it. If you cannot answer that, then you need find out. It is hard work to be successful in the stock market, just as in any other industry or market.
Do not hesitate to make a decision and press the button. If you hesitate to stick to your own decision then you might lose on good opportunities and be not as successful as you could be.
Know the risk and chances. It can be risky to buy any stock. Even if you buy the most conservative low risk company, there is a chance that the price of the stock will go lower than what you have paid for it. On the other side money can be made with total-loser companies.
Scenarios
The following scenarios are in my opinion the common strategies on the stock market and a good start for the beginner before taking part. Let’s check what can happen when you follow each one of them.
- Buy one or few stocks
- Buy few stocks and few bonds
- Buy a lot of stocks / bonds
- Buy funds / ETF
- Speculation / Speculation 2
- Speculate ALL IN
- Investing on a loan
- Trading
- Go short
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