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Essential things you need to know about the share market
Share trading can be a rewarding way for you to make a profit on your invested money. But you must have the ability to deal with it tactfully. However, it becomes less rewarding when the transaction fees are over the roof per trade. What is the use of trading when you spend all of your profits paying commission and bills?
You can minimize all these extra costs by following some techniques only. But at first, let us take a look at what a share is.
Share market
A share is a portion or unit of 100% value of a company. For example, if a company is worth $10000 and it has 50 shares then each share will be worth $200. This price may go up or down due to the market demand.
Companies need a huge amount of investment to run their business which is not often possible for the owners to provide. So, to ensure investment for their companies and administrating their work, they sell the shares of their companies in the market. Investors then take a look at the market and invest in the company they find the most profitable.
Here are seven things you may need to know while share trading.
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There are two options
When you are investing in the share market, you will come across two options.
- You can own shares yourself
- Invest collectively with other people. This method is known as the fund.
When you are a first-timer, the fund option might be safer as many others are also investing. So, it minimizes your chances of losing.
Investment duration
This is one of the most important things to consider about the share market. You should at least invest for five years for you to get access to making a profit. Now if you are thinking of a short time trading option, this might not be the most suitable trade for you. The share market traders are here with a long-term view to stay in the long run. When you are buying some of the shares of a company, you become a part of it. This relation is not just a momentary one so, you need to be very sure if you want to invest a long duration in that company. Otherwise, you may be wasting both your money and time. You can check here and learn more about the CFD market and diversify your investment skills. Never forget knowledge is power when it comes to trading.
Holding shares
If you hold shares of only one company at a time, it might be very risky. As we have discussed before that you need to invest for at least five years and this is a long time. Many things can happen at this time. A flourishing company may go down or a small company may grow big. Again, a successful company may grow bigger than ever in this time. But all these are just assumptions. So, if you focus on only one company, it can be of the huge risk that is not good for your trading account. For that reason, you should always have more than one options in your hand while stock holding.
Know how to make money
Well, we guess you were waiting for this call. So here we are spilling all the tea about how to make money in this trade. There are two ways you can make money from this trade. the first one is when the shares have an increase in demand. This increase in demand leads to the increase in value and from this value increment you can make a profit when you sell them.
The second option is by getting dividends. These dividends are like the interests that a shareholder get when the company makes a profit. When the company is making a profit, it will give a portion to you worth equal to your investment for you to make some money.
While you are investing in this stock market, you should remain aware of five golden rules- 1. To make more profits you need to face more risk, 2. Don’t put all your investment at once, 3. You shouldn’t take too much risk on a short-term basis, 4. Review your portfolio, 5. Be optimistic. If you can follow all these rules, you can rest assure to make profits in the share market.
Harper Harrison is a reporter for The Hear UP. Harper got an internship at the NPR and worked as a reporter and producer. harper has also worked as a reporter for the Medium. Harper covers health and science for The Hear UP.