How The Stock Market Works?

Stock Market Works
Stock Market Works

The stock market is really huge and everything about it can be very complicated. The beginnings are tough and unfortunately, later it’s not getting easier. Whole knowledge and experience can never provide you even with a small success and safety. That’s why traders must control their every move. And just because stock markets and finances are one of my favorites subjects for several years, I needed to finally write something more about it.

I wondered what I should begin this whole stock market introduction. It would be nice to write some facts, explain how each financial instrument works, talk about trading psychology, put some numbers and much other stuff, without which stock markets don’t exist. For now, all of it it’s kinda simple and logical in my head but believe me, it wasn’t always like that. I was lucky because I found a fantastic teacher who didn’t overload me with too much information. He never tried to shine and impress me with his knowledge, only explain stock market basics like he would explain the multiplication table to a child.

And I’m gonna do the same thing with you guys.

While I was writing this post I was wondering what was most important for me in time, when I started my stock adventure. In my mind, I came back to the past, when I tried to understand what it is about and how the stock market and investing works. Actually, I think that this question is really the key to the whole thing because it simply helps to realize how it really works.

So how the stock market works?

Contrary to the most popular belief, investing isn’t the same thing as gambling and playing with slot machines (unless somebody wants to play at random). It’s not also like I’m going to buy tomorrow some Apple Inc. shares because it has a “P’’ letter in the name and “P” is actually my lucky letter. I don’t read the leaves, practice crystal gazing, try to find out some answers in tarot or solitaire cards. Trader life isn’t like “Wolf from Wall Street”. I don’t drive up with white Lamborghini to my investing center, which is located on the world’s most popular financial street. What is really important I’m not some math genius and I don’t spend hours and hours on super hard calculations (so integrals can back off).

What it really looks like?

Almost every single day, from Monday to Friday, from 8 am to 17 pm, I’m sitting next to my laptop, reading economic news, checking out stock market quotes, following charts, and trying to make the best decision. I pull out my money, try to multiply them, and don’t let to get hurt too much. Just like that, although It’s not so easy in practice. But the stock market is like anything else. Nobody is born with huge knowledge and logical thinking. Of course for some people, it comes easier and natural but still it doesn’t change the fact that we get our abilities with ages.

Even the language is the only a bunch of meaningless lines until someone will call them letters and put together into sentences. Every information (from news and charts) has some impact on the stock market. All you need to do is to notice that and draw some conclusions.

I put it very simple but that’s how my investing looks like. Based on the acquired knowledge and different information I must judge if charts and prizes are going up or down. After I made the decision I log into a mine brokerage account, open short or long (yes, you can earn in two different ways), paid some cash, and wait for what’s going to happen. If everything is okay I wait for the best moment to end the transaction with the highest gain. When something falls apart I take my stuff as fast as I can and stay away from stocks.

Also Read: How To Invest In Stocks UK?

Everything I do start with this one question, which I asked a few years ago. And the answer was quite similar to this I gave you today. For me, it was enough so I got interested in whole finances.

If you want to know more about finances basics finances, you should read “Rich Dad, Poor Dad” by Robert Kiyosaki. But remember, you won’t find exact pieces of information about shares or bonds there, only about savings, spending, or investments in general. This book is very simple and gonna teach you that managing your money. That’s one of the most important things you need to do in life if you don’t want to complain about your finances.


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