What is the stock market and how can it be traded?

What is the stock market and how can it be traded?

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The world in general is immersed in the digital age, and all areas are affected, investing in virtual currencies and other alternatives has been important and weighing issues today, therefore, we are going to know a little about the stock market.

How can I trade with it?, and the most important, How can i earn money through this?

They are key questions in this article and little by little it will be deepened, in order to facilitate the way to the introduction to the world of the stock market.

What is the stock market?

The stock exchange is a private institution, in specific countries, as in the case of Spain, the stock exchange is BME (Spanish stock exchanges and markets), among others, all countries have their institution.

However, What does the stock market do? These institutions make it possible for natural investors can make a profit on their savings, investing in companies in your country.

On the other hand, companies in that country obtain a financing method, how do they do that?

Selling a small percentage of shares and distributing the profits of that company in the form of dividends and that agreement between private investors and companies that want to finance are made possible through the members of the stock exchanges of each country, that is, credit institutions, banks , or the so-called brokers, which are the ones that channel buy and sell orders on the stock market.

There is another actor that is present in this ecosystem which is called the bag police, which is in charge of ensuring that there is no irregularity, either on the part of the shareholders or on the part of the companies, that is, it is in charge of check that everything is running smoothly and that all types of transactions are made with total transparency, thus transmitting security and reliability.

In the stock marketNot only do companies have a means of financing, selling shares, obtaining benefits and thus being able to expand their facilities, countries also obtain financing, thus obtaining bonds and other types of benefits that allow them to contribute to the maintenance of their institutions.

In general terms, this is intended to make people understand that investing in the stock market benefits everyone, since there are benefits for companies and thus increase their productivity; in the country, in terms of maintenance in the social and public sphere and finally the person as an investor.

Investing in the stock market is not an immoral business, at the end of the day, we all win either way. The essence of the stock market is to diversify risks.

How can I make money from the stock market?

To be successful in investing in the stock market, you must be clear about certain questions:

What is traded on the stock market?

The stock market it's an open market where many products are traded, where they are not only present the actions; which are portions that a company which you can acquire and obtain rights from it as well as benefits, what is called is also negotiated fixed rent; where the bonds are present, means by which some companies and the state are financed in that way.

Moreover, they can also be negotiated through foreign exchange; Everyone knows that currencies are constantly changing, that is, they go up or down and in some way these changes can be taken advantage of.

They are also negotiated indices; All countries have important companies and these make up an index, where you can invest directly in it. And of course, raw material; You can invest in oil, cotton, cocoa, among others.

How do you invest in the stock market?

This would be the most important or most logical question in this case. The main way to invest in the stock market would be through the counted; which is where you look at some stocks and buy them.

Another way is to invest through a Investment fund; for example, you want to invest in Mexico because there is an investment fund specialized in Mexican companies.

Then there is also derivatives, where they can be found with options, futures, CFDs, SWAP ... There are many derivatives and this is an also effective way to invest in these products.

How can I make money on the stock market?

It is the most anticipated question by future investors in the stock market, there are also several alternatives, but the main way to earn money would be to for differences, which is a very simple alternative where shares are bought at a certain price and in a few days those same shares increase in value.

Through dividends It is another way to earn money through the stock market, where if you have shares in a company and this in turn obtains benefits, a dividend is distributed to shareholders every year, whose dividend varies according to income or benefits.

How to choose a company through the stock market that will generate profits or profits?

When you decide to invest in the stock market, a question always arises and that is, am I choosing the correct company or the correct alternative? How can I know if its value will rise or fall? To clear up these doubts, you can resort to the 2 techniques of value analysis, which have great importance, and these are the fundamental analysis and technical analysis.

Fundamental analysis, is where the periodic financial statements, company evaluation techniques, economic forecasts, general economic information and any type of additional information that may affect the value of the shares are analyzed in greater depth, it is basically to study in more detail all the finances of the company in which you want to invest.

On the other hand, technical analysis it is mainly based on price accumulation, mathematical formulas, moving averages ...

But these calculations are performed automatically by graphs and this does not take into account all the financial information and the economic status of the company, it is simply responsible for showing the graphs regarding your investment and profits.

When choosing the organization where you will invest through the stock market, it is necessary to take into account these two types of value analysis, not just one of them, because combining these two types of analysis has a much higher probability of being successful.

Image: Lorenzo at Pexels.

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