Stocks

What is Stock Trading?

You may have seen the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE) often in the news. They represent some of the most popular stock exchange which is a public marketplace for shares, stock, and equities.

What typically influences a share price?

    • The profitability of a company
    • Earnings updates
    • Market expectations and trends

Stock Trading Basics

Stock Trading Basics

In order to sell a stock, a price where the seller wants to sells it will be submitted, and the same goes for the price that the buyer is willing to buy it at. When the lowest selling price meets the highest buying price, the transaction is made. This process is fully automated and occurs thousands of times per second on popular stocks where many investors flock to. Quotes displayed are prices for an immediate deal.

“Buy Low and Sell High” is the general strategy for stock trading where traders look for cheap shares hoping that they would rise in price in the foreseeable future. CFDs will also allow you to profit by short-selling. This works by selling the shares you didn’t own in hopes of buying them later for a lower price. Lastly, there are long-term investors who buy stocks to earn dividends where they get awarded with interest on a regular basis for owning these stocks.

Stock Trading Basics

In order to sell a stock, a price where the seller wants to sells it will be submitted, and the same goes for the price that the buyer is willing to buy it at. When the lowest selling price meets the highest buying price, the transaction is made. This process is fully automated and occurs thousands of times per second on popular stocks where many investors flock to. Quotes displayed are prices for an immediate deal.

“Buy Low and Sell High” is the general strategy for stock trading where traders look for cheap shares hoping that they would rise in price in the foreseeable future. CFDs will also allow you to profit by short-selling. This works by selling the shares you didn’t own in hopes of buying them later for a lower price. Lastly, there are long-term investors who buy stocks to earn dividends where they get awarded with interest on a regular basis for owning these stocks.

How to Choose a Stock to Invest In

How to Choose a Stock to Invest In

How to Choose a Stock to Invest In

The best way to choose is to shortlist companies that you are already interested in. For instance, you can pick Netflix or Amazon if you are into streaming services. You can also look up companies who offer the products or services which seem attractive and list those down.
Additionally, following reputable news sites such as Reuters, Bloomberg, FT can ease decision-making in stock trading. By understanding what is happening at the macroeconomic level, it will make your selection process much simpler. For instance, if there were any tax breaks or trends in employment or government loosening regulations on a particular sector – you can predict how this may affect the revenue of certain parts of the economy in the near future.

Once you have made a short-listed selection of companies, it is now crucial to exclude companies that don’t meet certain requirements. First of all, it is vital to study the company’s earnings report. US-based companies issue these reports every quarter while UK-based companies do it semi-annually. When you analyze the report, be sure to check its long-term earnings history.

Some questions to consider are; how volatile the company’s earnings have been, whether a company pays dividends and how much they are, what drives the company’s profits and influences the costs, amount of debt it has, who is the CEO and his outlook on the company’s future direction, and lastly reviews of how users think of their product or service. Conclusively, it is about the company’s prospects and how it fits in the portfolio you’re trying to build. If there are too many technology companies, think about how diversified you want your portfolio to be. Also, consider if you prefer many growing companies or mature businesses which offer regular dividends.

The best way to choose is to shortlist companies that you are already interested in. For instance, you can pick Netflix or Amazon if you are into streaming services. You can also look up companies who offer the products or services which seem attractive and list those down.
Additionally, following reputable news sites such as Reuters, Bloomberg, FT can ease decision-making in stock trading. By understanding what is happening at the macroeconomic level, it will make your selection process much simpler. For instance, if there were any tax breaks or trends in employment or government loosening regulations on a particular sector – you can predict how this may affect the revenue of certain parts of the economy in the near future.

Once you have made a short-listed selection of companies, it is now crucial to exclude companies that don’t meet certain requirements. First of all, it is vital to study the company’s earnings report. US-based companies issue these reports every quarter while UK-based companies do it semi-annually. When you analyze the report, be sure to check its long-term earnings history.

Some questions to consider are; how volatile the company’s earnings have been, whether a company pays dividends and how much they are, what drives the company’s profits and influences the costs, amount of debt it has, who is the CEO and his outlook on the company’s future direction, and lastly reviews of how users think of their product or service. Conclusively, it is about the company’s prospects and how it fits in the portfolio you’re trying to build. If there are too many technology companies, think about how diversified you want your portfolio to be. Also, consider if you prefer many growing companies or mature businesses which offer regular dividends.