How to make money in the stock market

  • Have you ever wanted to make some extra money in a stylish way?
  • Did you ever want to learn how to make money with the stock market?

The stock market may seem really complicated to understand and may seem difficult to make money from at first glance. This is normal and once you understand what the numbers and terms mean then there is no reason to keep avoiding it. The stock market is a place where millions if not billions are made and lost each day trading stock, commodities and forex (we will explain each of these terms later on).

People Make Investing Seem More Difficult Than it Should

“The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.” Warren Buffet

There have been many success stories of many people who were once poor making it big by trading on the open market and making hundreds on millions and some making billions of dollars over their careers. Take the Wolf of Wall Street he was a guy who trained to become a stock broker and made millions, though not all legally, Warren Buffet who is the best trader in the world worth billions and many more. Its in your hands to earn what you want to earn.

Now lets get started:

“An investment in knowledge pays the best interest.” – Benjamin Franklin

Stocks – a share in a company

Commodities – raw materials like oil, gas, metals, grains

Forex – trading in currency

There are different markets for different industries like the NASDAQ for technology, the New York Stock Exchange for main companies like coca cola.

If you really want to, you could learn about investing in the markets with the below guides and they will teach you how to read and understand stock market graphs and the lingo. They will also help you understand which stocks to invest in. We say “invest in what you like not what others like”.

http://finance.yahoo.com/education/stocks

http://www.investopedia.com/

 

Lets take you through an example chart to make things easier for you:-

Trading stock sheet example
Trading sheet example

Columns 1 & 2: 52-Week High and Low – These are the highest and lowest prices at which a stock has traded over the previous 52 weeks (one year). This typically does not include the previous day’s trading.

Column 3: Company Name & Type of Stock – This column lists the name of the company. If there are no special symbols or letters following the name, it is common stock. Different symbols imply different classes of shares. For example, “pf” means the shares are preferred stock.

Column 4: Ticker Symbol – This is the unique alphabetic name which identifies the stock.

Column 5: Dividend Per Share – This indicates the annual dividend (portion of companies earnings) payment per share. If this space is blank, the company does not currently pay out dividends.

Column 6: Dividend Yield – The percentage return on the dividend. Calculated as annual dividends per share divided by price per share.

Column 7: Price/Earnings Ratio – This is calculated by dividing the current stock price by earnings per share from the last four quarters.

Column 8: Trading Volume –
This figure shows the total number of shares traded for the day, listed in hundreds. To get the actual number traded, add “00” to the end of the number listed.

Column 9 & 10: Day High and Low – This indicates the price range at which the stock has traded at throughout the day. In other words, these are the maximum and the minimum prices that people have paid for the stock throughout the day.

Column 11: Close – The close is the last trading price recorded when the market closed on the day. If the closing price is up or down more than 5% than the previous day’s close, the entire listing for that stock is bold-faced. Keep in mind, you are not guaranteed to get this price if you buy the stock the next day because the price is constantly changing (even after the exchange is closed for the day). The close is merely an indicator of past performance and except in extreme circumstances serves as a ballpark of what you should expect to pay.

Column 12: Net Change – This is the dollar value change in the stock price from the previous day’s closing price. When you hear about a stock being “up for the day,” it means the net change was positive.

Anybody can make money with investing and so could you. There is a great company here that offer a great platform for you to get started and you could trade in any market you like. They offer great support, a signup bonus and a demo account with £20000 for you practice until your comfortable moving to live trading and with that amount of money you could make a huge sum trading in the right stock. They take no commission and all profits are yours but please remember to trade safely and responsibly or your capital may be at risk.

You may still be wondering, Is this a good way to make money?

If your looking for extra income or even a big income then this is a good way. With your signup bonus and some money you may put into your account you can then invest in great companies like Apple, Ferrari, HSBC, American Airlines, Facebook and many others.

When you invest in these companies you want to buy them at the lowest price you can so you would assess the days, weeks and months graph to predict if price is high or low to buy the stock. When you think the time is right buy the stock then sell at a later date when prices are higher than the price you bought the stock to make a profit, its like buying and selling anything. But only buy stock in companies your comfortable with and are happy to hold shares in.

Sometimes it takes a while for companies to grow and to hold stock in those companies is like a long term plan. For other companies you can buy shares and sell them in one day to make a profit.

You need a good amount of money to make a good amount of money, for example one stock may cost £3.10 and then in a day or week can go to £3.50 so if you have enough to buy 1 share you make £0.40 which is not much but if you have enough to buy 1000 or 10000 shares imagine what you could make.

So start with a good amount of capital and never rush into buying anything always research the company before you buy just like you would if you were going to buy your first house you would do all the check like see the value of property in area, safety of area, market trend, structure of property etc….

See these quotes by Warren Buffet below for some insight:-

1) Buffett’s Only Two Rules For Investing…

“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1”

2) Get Around the Right People

“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.

3) Buy Wonderful Companies

“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”

4) Your Public Image and Reputation

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

5) It’s OK to Dream Big

“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”

6) Invest for the Long Term

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

7) Buy It Thinking You Will Hold It Forever

“Our favourite holding period is forever.”

8) Don’t Be Greedy

“…not doing what we love in the name of greed is very poor management of our lives.”

9) Spend Time on Personal Development

“The most important investment you can make is in yourself.”

This is a good way to make money but only do so if your comfortable and can afford to do so. Should you invest in the wrong stock then you could lose money so make sure you know what your doing before you get into this business.

[image from darpanmagazine with info from investopedia]

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