January 25, 2017

Stock trading

What is stock trading?

If you find yourself with an extra bit of cash, it’s always smart to invest it. How you invest this money, however, is completely up to you. You could take it to the stock market and buy equities, bonds or invest in Forex. If this all seems a little complex for you, stock trading might be in your ballpark. Stock trading is fairly simple to do, and one of the most common ways to invest these days. Many banks, websites and even apps have made it incredibly easy to invest even just the smallest amount into stocks. So let’s dive into it; what are stocks exactly, and what does stock trading actually mean?

Supply and demand

Stock trading is easy to understand, because we all know the basic concept of it. Most things are based on the concept of “supply and demand”. If many people want a certain product, the company that makes that thing will have to up the production to meet the demand of the people who want to buy their product. This is exactly why some stocks will fluctuate heavily, while some stocks are more stable. For example, let’s have a look at McDonald’s. This is a company that earns a lot of money, and has been around for over decades. It has consistently done very well, and will most likely still do very well in the future. This is a safe stock to invest in, because it will guarantee you a small profit. Stock trading doesn’t mean you have to stick to safe stock investing, though. If you think a small company is up-and-coming, it might pay off to buy their stocks. So when we’re talking about stock trading, we are essentially talking about buying a very small amount (we’re talking fractions of fractions) of a company.