The stock market is a complex system: learning how it works is essential if you want to make the most of it
It requires time, patience, and dedication to understand how trading works, and which strategies you should use to invest in a profitable way, however, if you want to be successful on the stock market, these skills are absolutely essential. Getting started is simple. Shares are bought and sold on the stock exchange. It is here, in a regulated market, that the exchange of money for shares (and vice versa) takes place. Today, the matching of sellers and buyers is done by computer.
The most important stock exchanges in the United States are the New York Stock Exchange (NYSE - New York Stock Exchange) and the NASDAQ (National Association of Securities Dealers Automated Quotation). At the NYSE you can find blue chips, or large market capitalisation companies, such as Coca Cola or McDonald's, for example. The NASDAQ, on the other hand, is the main technology stocks index, which includes companies such as Apple, Amazon, Google, and Netflix. At the NYSE, the shares belonging to a particular company are listed by their ticker - an abbreviation that uniquely identifies a stock - consisting of two letters: KO is the ticker for Coca Cola, HD is the ticker for Home Depot. In NASDAQ, on the other hand, stocks usually have a four-letter ticker: for example, AAPL (Apple), and NFLX (Netflix), however there are a few exceptions such as FB, which is the ticker that identifies Facebook.
If an investor is to be successful, they must be able to guess what direction the market will take. However, sudden changes in the technology sector and in our society are making it increasingly difficult to make these kinds of predictions. There are two ways to make money in the stock market: be an investor or be a trader. Investors buy stocks and then put them aside, almost forgetting they have them, and at times even leave them there for several years. Traders, on the other hand, buy and sell stocks at a much faster pace, owning stocks for as little as an hour, a day, a week, or a month.
In a perfect world, you should try to be part investor and part trader, in order to differentiate your buying and selling strategies. In addition, it would also be useful to diversify the products you deal in, including bonds, options, futures, venture capitals, and real estate in your action plan. There is no universal winning strategy that can be used by everyone: each person must gradually understand what their strategy is, taking into consideration various factors, including their own level of risk tolerance. If you are not able to see your investment fluctuate without getting palpitations, it is most likely not a good idea for you to go down the route of trading. In any case, for people who are just starting out, the advice is to start by relying on the guidance of a financial advisor.