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making money on stock market

3 Methods for making money on the stock market

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making money on stock market

Today i am going to share with you my knowledge on making money on stock market.

Making money on stock market: Method 1

The first method on making money on stock market is to invest in stocks for the long term.  like Warren Buffet. Look for a good company and invest for long term. Every time a company performs well and the results are better than expected then the value of the stock of that company will increase. So you will have to do a good research on that the company and the market that they are active in.

When you do a research you have to look at the potential of what a company can be. After all investors invest because they believe they will make a good profit in the future. So when you invest in a company make sure you know exactly what the potential of the company is and know if the current CEO and his/her management team can make this potential come true. As you all probably know, a company can only grow if they have a good CEO with his/her management team.

How to recognise a good management team?

One of the best way to know if the management team  is good, is to check the company’s quarterly results and see if the management team of that company  have achieved their goal or  did they do better than what wall street analyst had  expected. Most companies have we website with a section investor relations. You can find the quarterly results on the investor relations section. Or just google for it.

Now a example of a company that has a clear potential is Starbucks. Starbucks potential is that they can open thousands of store in the future where consumers can enjoy their Starbucks products. So it is easy to understand that the more stores they open, the more money they can make. And thus the value will go up in the future.

A example of a company that doesn’t have a clear potential is Twitter. For me I don’t see or understand what the potential of twitter is. Like all social media, their revenue is relied on ad revenue. To earn more ad revenue, twitter needs more unique users. At this moment I don’t see how twitter is going to create a large base of unique users compare to Facebook and snapchat.

 

Making money on stock market: Method 2

When you buy a stock, you can buy a dividend stock. A dividend stock gives investors a piece of the company’s profit. In the video How make to make a passive income with dividend, i explain more about this subject.  

Making money on stock market: Method 3

The third method on how to make money stocks is by going short. You probably have heard the term of going short on the market. This one of the few ways of making money when the stock market goes down. Meaning that you can earn a profit when the stock price value goes down.

So how does this work? When you are going short, you are making a deal on contract with a buyer. In this contract you have a deal that the buyer will buy the stocks of you for the current stock price where you have just gone short. So if the price dropped in the future then you are making money. However if the price goes up then you will be losing money. Because when you go short , your broker buys the current stock and hold it for you. So when the stock price goes up , you will have to pay the difference to your broker. This procedure is called margin call.  Each broker have their own margin call policies. In  margin call you have a deal with your broker , that if price goes over % of the stock price value of your short position. Then you have to pay for the difference.

So guys these are the three methods were professional traders, investors make money on the stock market. If you have any questions or remarks, please put it in the comments section. We will get back to you as soon as possible. Thanks for reading and good luck with making money on the stock market.

Read more about CFD Trading: How to make money with CFD Trading

stock market

Stock market : What is it and how does it function?

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Stock market

Are you considering to start trading in the stock market or starting to invest in the stock market. Then  you have come to the right place. In this article you well get know what a stock market is , how the stock market functions and who the participants are. So let’s get starting.

What is a stock market?

A stock market is a market place where people and companies can buy or sell shares. The buying process works as follow. If you see a share that you find interesting then you can do two things. First you can buy the share for the current market price or you can try to buy it cheaper then the original market price by placing a bid. And if the bid gets accepted then deal has been concluded.

In the old days it was very difficult for you as a private consumer to access the stock market. If you wanted to place an order back then, you had to  have a broker that were sending his/her people to the market floor to execute your order.Now with the modern technology and internet it is very easy for a private trader like you and me to access the stock market. All we need  to have is a account at a on-line broker and we are able to execute our orders by ourselves. If you are interested in how to trade the stock market on-line then read this article: on-line share trading.

What is the function of a stock market?

The stock markets has two functions. The stock markets gives buyers and sellers the opportunity to trade shares with each other in a safe environment. And the second function is that it gives companies the possibility to get capital that they need for the their business. So the way of how the stock market works is as follow:

1. Company A is planning to expand their business. For expanding the business company A needs to do an investment for it. And since company A doesn’t have the capital for it, it decides that they want get the capital at the stock markets. In exchange for the capital company A gives a bit of ownership of the company away in the form of shares. There reason why many companies like company A wants to enlisted their stocks at the stock market is that they can get a huge amount of capital with out worrying of paying back. And of course they don’t have to pay interest rate.

2. Investors and traders can buy shares of the company that they like. And if they have stopped liking the company then they can sell the shares. The volume of those transaction depends on how popular the stock is. If the demand for the stock is big but the supply is small it most likely that the price for that share will increase and vice versa. The reason why there is many transaction in stock markets everyday is because of the huge amount of participants the stock market haves. And each participant has their strategy and vision of how that stock will develop in price. The market participant varies from small private investors , big investors such as banks , pension fund , hedge funds , institution and companies themselves (buying back their shares). So now you know what the stock markets is , how functions and who the participants are. With this basic understanding of the market, you can start trading.