Understanding the Stock Market

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We’ve all heard the success stories of Warren Buffet as well as numerous other stock brokers who have made a killing using the stock market, but is it really a magical place where people turn from rags to riches instantly? Here is a guide to help you understand how the stock market works and how you can use it to your advantage.

How do I make money off the Stock Market?

When you buy stock in a company you are giving them money now, and hoping that their company increases in value. If it does, the value of your stock will increase and if you want, you can sell it at that higher price to a new buyer who trusts that the company will rise to even greater heights. The key is to buy stock for low and sell for high, but how can you predict how the market will work? If you invest in a company that then goes bankrupt, your stocks become essentially useless, so although we hear all about the massive money earned by virtue of the stock market, there is also billions lost.

How can I predict trends?

There are a few ways to predict trends in the stock market. You want to be able to understand where a company gets all the resources it needs to produce a product, and see if it’s currently cheap or expensive to make. If you believe that it will soon get cheaper to produce and believe the company is on an upward trend, it may be a good idea to invest in them.

There is also a phenomenon called the elliott wave theory which shows that investors tend to collectively move between optimism and pessimism when it comes to stocks, for more information you can check out this link.

There are numerous tips and tricks to master the stock market, what’s important is to understand the way the game is played so that you can be more comfortable and knowledgeable when it comes to brokering, I wish you the best of luck!

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