5 Things to Know about the Stock Market

by Jeff Soriano Views: 40

 

 

Thanks to online trading, investors today have direct access to the most popular stocks from all around the world.

Online trading is now faster, more convenient,and is more cost effective than ever before.To make it even better, all of this can be done from the comfort of your own sofa.

Online brokers likeUFX.COM, gives you access to a trading platform from where you can invest in stocks, in addition to a wide range of other asset types.

Let’s discuss some of the basics of trading shares:

  1. Definition of stock.Put simply, a stock is a stake in the ownership of a firm. The more stocks you acquire, the bigger your ownership of the company will be. You are then called a “shareholder”. You might read or hear other words to describe stocks, such as equity or shares.

 

  1. Different types of stocks. There are two main types of stocks: common stock and preferred stock. The first one comes with voting rights and dividends, while with the second one you don’t have voting rights –instead, youhave seniority for dividends as well as bankruptcy claims over investors owning common stocks.
  2. “Buy low, Sell high”. While investing in the stock market, you’re technically betting on acompany’s future performances, and its future earnings. When following a stock’s pricemovement, in order to make money, you need to buy a stock when its price is low, and sell it when its price is high.

 

  1. Profit from the stock market. One of the characteristics of investing in stock is to receive a dividend, which is a part of a company’s earnings distributed to its shareholders. Of course, you can also make money by taking advantage of changes in stock prices, mainly driven by supply and demand.
  2. “The Trend Is Your Friend”. While following a stock’s price movement you can see that prices eithergo up (Bull Market), go down (Bear Market), or go sideways (Ranging Market), depending on the direction of the market. Bulls and Bears are consistently fighting to take control of the direction of the market. Following the trend is one of the best strategies to correctlyanalyze the stock market and make money.

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