As is known, they have been earning on stocks for many years, and this has not lost its relevance so far. Can stock trading really become a source of steady income, or is it just a good marketing move for brokerage firms? Find the answer to these questions will be in this article.
In order to learn how to make money on stocks, you need to understand the principles of the functioning of the financial market. The fact is that all the mechanisms of price movement are closely intertwined and the change of one link leads to the inevitable reaction of the other. The stock trading system is based on investments, with the aim of making profitable investments with their subsequent sale. It is one of the most profitable and efficient in the world.
But profitable stock trading can be only when the investor knows all the subtleties of the market movement. He must daily enrich his knowledge base and develop his own trading strategy.
In order to choose the right stocks, you must use fundamental and technical analysis. With proper use of these analyzes, you can see where to invest and where to wait.
The whole process of trading takes place in the stock market. Is it possible to get there for a beginner, and how to make money on promotions in such an unfamiliar and unusual place? The answer is simple - you need to choose a reliable broker who will provide a demo account for training. Having learned to trade in real time, but only on a demo account, you can proceed to work with a real deposit.
The stock market operates according to its rules and laws. It is very difficult to work there even for professional investors, not to mention novice traders. Therefore, you should not trade without being confident in your abilities.
How to choose the right tools
The most common mistake of many novice players thinking about how to make money on stocks is buying the most expensive stocks. They can rise sharply due to the impact of external economic factors, but this does not mean that these stocks are the most reliable. Today the market has turned in their direction, and tomorrow the price will be much less, and the investor will lose the invested funds.
Sometimes it is better to buy cheaper stocks, but only if the trader sees the potential growth of the companies that released them.
If the investor’s goal is to invest in shares to get passive income, then you need to choose securities with dividend payments. Thus, the owner of the shares can receive an annual passive income in the form of interest deductions.
How to make money on stocks
Suppose that a novice player has opened his account, has been trained and is ready to work in the stock market, but does not yet know how to make money on stocks in the real stock market. The next step is to choose stocks that will need to be bought. As soon as the price goes up, it will be possible to sell securities, or wait for further growth. The difference between buying and selling will be a profit.
Some experienced investors advise you to create your own securities portfolio that helps you really make money on the financial market. Only for successful trading you need to make it right. This can be done both independently and by contacting special companies.
How much can you earn
In practice, there are several ways to purchase securities. Depending on the chosen trading option, the resulting profit will be added.
In real trading, when shares of a company are bought, the amount of profit will depend on two components:
- increase in the value of securities.
Real trading is less risky, but less profitable.
In speculative trading, not the shares themselves are acquired, but obligations to transfer them. In this case, the amount of potential profit increases significantly. This is due to the leverage provided by the brokerage company. If the size of the leverage is 1: 100 and the amount of the deposit is $ 100, then the transaction can be opened for an amount that is a hundred times higher than its own funds.
This type of financial securities trading is highly risky, but it can also bring profits many times faster than with real trading.
So how much can you earn on stocks? In general, statistics show that a fairly experienced investor in the stock market may well earn about 40-60% per annum. Of course, this is not a huge amount, but significantly more than deposit interest in banks.
Tips for beginners
No need to treat securities trading like a roulette. This is a very serious and responsible work that requires constant monitoring of the situation on the world market. Studying the news, it is necessary to do an analysis of the situation and only then begin trading.
In order to work in the stock market with a cold settlement and a sober head, you should open a deposit only on the amount you are willing to lose. You should not go into debt and loans, otherwise everything can end very badly.
You should not also treat the stock market as a supermarket of securities, buying up all the shares there in a row. Professionals advise to study in advance the shares of those companies that are planned to be purchased, and only then to buy. Only by knowing how to make money on promotions can one make this the main profession.
The main criterion for successful trading and, as a result, obtaining a stable profit is investor discipline. That is why novice players, succumbing to the first success, lose their composure and their entire deposit.
Asking whether it is possible to make money on stocks, the investor will receive an affirmative answer, but only with the right approach.