The stock trading It is an activity that has gained in popularity and that allows you to operate in the different stock markets. We cover what stock trading is and everything you need to know about this very common activity.
What is stock trading
The word “trade” means “to trade”, so stock trading is nothing more than the buy and sell a of company shares or derivative products such as raw materials. It is also possible to trade Forex, that is, currency pairs. The objective is always to obtain a surplus value.
Before moving on and knowing How is the value of a stock calculated? , you will have to learn a concept called “face value.” We say that the nominal value of a share is the figure obtained by dividing the share capital of a company between the shares that are issued.
However, the nominal value does not have to correspond to the value of the share in the market. This happens because that real value is the result of dividing by the net worth and not by the social capital. In addition, the price of a stock in the market does not have to be exactly that of the nominal value or that of the real value. When to sell a stock I wish we had the ability to always sell into winning positions. But the markets are sometimes unpredictable and our knowledge limited. But you should keep in mind some tips for when to sell a stock.
First of all, and we won’t get tired of repeating it, but you must be able to answer 2 questions coldly. If I have losses, is it time to assume them? If I am winning, can my shares go higher? Keep in mind a fundamental maxim, if our shares have gone up a lot, they will also have the capacity to go down. Evaluate whether the profits, which are usually estimated as optimal between 20 and 25%, are more than enough. Also think that what you do today, sell that action, may be better now than later. Anyone can trade stocks, at least a priori. That is perhaps the mantra that does not stop repeating itself, especially by stock market gurus. Keep in mind that there are thousands of people like you, wanting to obtain benefits and enter a world that is exciting. But to trade stocks, or commodities or currencies, you’re going to need 3 things.
A capital starts: This will be determined by what you want to invest. It is always convenient to have a limited budget, which does not have to be high at first. If you don’t have money, there are platforms, most of them, that have demo accounts. Strategy : A trading strategy will determine where you want to go and how to do it. There are many trading styles, each of them adapted to an investor profile and that will make you trade in one way or another. Knowing them well will give you the keys to adapt your lifestyle to investment and be able to act in the best way.
Training : jumping into the pool without water always has catastrophic effects on your finances. In addition, you now have the opportunity to acquire quality trading education from many sources, and without the need to make any previous investment. Remember this advice that we always repeat, run away from anyone who promises you to win a lot in a short time. All he wants is your money. Go easy and take small steps.
Learn fundamental analysis
He is one of the keys to trading well in stocks. Fundamental analysis is defined as the one that tries to determine the price of a stock theoretically. To do this, study all the variables that can affect that action. This analysis does not determine whether a stock will go up or down, but what its fair price should be.
Learn technical analysis
By contrast, technical analysis focuses on the movements of stocks, that is, whether they are going to go up or down. To do this, it makes use of different prediction and analysis tools. The father of technical analysis is Charles H. Dow, who created the Dow Jones index and which is made up of the 30 companies with the largest market capitalization on the New York Stock Exchange.
Learn to manage your emotions
When trading stocks you always have to take a premise: emotions must be left aside. It’s difficult, especially in the beginning, but the success of stock trading lies, in part, in our ability to trade smartly. If emotions affect you or you get carried away by impulses, the chances of failure increase exponentially. This principle is very simple, we will let ourselves be carried away by irrational actions that leave out our ability to analyze. A very typical situation is that of those who have lost and automatically invest in another security quickly to cover those losses. This is an irrational act that is likely to give you another losing position.
Have money you don’t need
We enter the stock market when we have capital that we are willing to lose. It does not mean that we go straight to failure, but that the loss of that money is affordable and does not unbalance your economy. Of course, you never operate on stock markets If you borrow money, you don’t apply for a loan in the hope of getting the money back in spades. Do you remember emotion management?
For the rest, trading stocks is something that millions of people do every day. You can be one of them if you set your mind to it, but be very clear about what your strategy will be, how you are going to do it, and how much you are willing to get involved. . You must not be a full time investor you can take it as an activity that gives you personal and economic satisfaction and, incidentally, provides you with very useful information for many areas of life. If you are thinking of investing, we recommend joining NAGAwhich offers an account DEMO with $10,000 so you can do the tests you need, before using real money.