If you want to achieve greater profitability, just expand your knowledge to learn more about the world of variable income. Even for beginners, the stock market has great opportunities. But, of course, it is necessary that this type of operation meets your investor profile and your financial objectives, as with any finance application.
But before explaining the stock market, one must be aware of the very concept of what a stock is.
So, read on! What is the stock market?
The stock market is the environment in which publicly traded companies trade fractions of their equity. In general, buying and selling operations take place on a stock exchange, but they can also take place in over-the-counter markets.
You may have seen on the news how the financial and capital markets move. Political, economic, and large-scale changes – with global influence, provoke reactions on the stock exchange. The variable income market is gaining more and more space, in an environment that was dominated by the security of fixed-income investments. This is evidenced by the growth of stockbrokers, especially in the USA and Western European countries. You can view the best stockbrokers in the UK on https://learnbonds.com/uk/stock-brokers.
The fear of investing in the stock market seems to be passing and more and more people are trying to understand how the dynamics of this market work. There are many ups and downs, but in practice, with knowledge and strategy, it is possible to seek good returns and keep risk under control. There are many myths and misconceptions about the stock market that are still in the minds of the general public. But once you understand how it works, it’s easier to give your money the right destination.
How does the stock market work?
One way to understand the dynamics of the stock market in a simple way is by comparing it to a fair. However, instead of commodities, companies make their shares available, also called “papers” That is, they negotiate a small fraction of their assets. Thus, the greater the interest of buyers, the more money they can raise, and the more their market value increases.
When buying a lot of shares in a company, the investor believes that those shares will appreciate and that, in this way, he will obtain profitability, selling at a higher price than he bought.
It is interesting to note that stock values change at all times due to their high liquidity, being defined by the transactions (buying and selling) that are taking place during the trading session. For this reason, investing in the stock market is recommended for that investor who is not totally conservative, as he will have to deal with a series of fluctuations.
When you buy shares in a company you become a shareholder. Depending on the size of the stake acquired, you will not need to participate in decisions about the management of the company, nor will you have debts in case of bankruptcy.
Stock market goals
Although the investor can lose or earn a lot of money in the stock market, as we have already pointed out, his objective is not related to this volatility, except for those investors who seek returns in very short-term operations, such as day trade (operations that begin and end on the same day) and swing trade (operations that only last a few days).
How to invest in stocks
There are, basically, three different ways for you to invest in shares: by funds, ETFs (Exchange Traded Funds – the Market Index Investment Funds), or individually, by building your own portfolio.
Equity funds represent one of the entry points to this market. Several investors (quota holders) collect their funds and delegate the administration of the investments to a manager. It is a form of investment that allows you to invest your money in different companies.
Exchange-Traded Funds (ETFs) are Investment Funds based on a theoretical market index. Through them, the interested party can buy a greater variety of papers at once, because when acquiring a quota, it is as if the investor buys a fraction of an index that comprises several shares
Investing directly in stocks
When investing directly in stocks, you are responsible for choosing which securities you will invest in and the amount you want to purchase. The operation is done by the home broker of the broker or bank you have an account with.
Now, thanks to technology, no matter which trading option you choose, you can trade anytime and anywhere, even via your mobile.