How The Stock Market Works?

The stock market is huge, and everything about it can be very complicated. The beginnings are tough, and unfortunately, later, it’s not getting easier. Fundamental 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 some of my favourite subjects for several years, I finally needed to 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 exist. For now, all of it it’s quite 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 going to do the same thing with you guys.

While I was writing this post, I wondered what was most important for me 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. This question is the key to the whole thing because it simply helps to realize how it works.

So how the stock market works?

Contrary to the most popular belief, investing isn’t the same 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 my lucky letter.

I don’t read the leaves, practice crystal gazing, try to find answers in tarot or solitaire cards. Trader life isn’t like “Wolf from Wall Street”. I don’t drive up with a white Lamborghini to my investing centre, located on the world’s most popular financial street. What is 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 looks like?

Almost every single day, from Monday to Friday, from 8 am to 5 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. Then, I pull out my money, try to multiply them, and don’t 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 tremendous knowledge and logical thinking. Of course, it comes easier and natural for some people, but still, it doesn’t change the fact that we get our abilities with ages.

Even the language is only meaningless lines until someone calls them letters and puts them together into sentences. All 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 decided, I log into a mine brokerage account, open short or long (yes, you can earn it in two different ways), paid some cash, and wait for what will 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 possible 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 going to teach you about 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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