Do you know enough about the stock market to make money from it?
"How the stock market works" – This is a common problem, and only a few sites actually provide answers. The challenge is to answer the question, so this question really involves how the stock market works and how to make money.
In its most easily understood form, the stock market is a market for selling stocks. Sounds too easy? think about it. In any market, you have a buyer, you have a seller. Depending on the mood of the buyer, they may be willing to pay more for something, just to get a seller to sell something. On the other hand, sellers may sell at a higher price, or want to really give a product just to get rid of it.
The stock market works in a similar way
Suppose you are a buyer of old records. You love the classic rock music vinyl. So you go to a market where people are willing to sell some of their collections for a price. You find the Beatles "butcher album" cover. You want it. The seller wanted $ 2000. As a buyer, you need to figure out what the future value of the record is. In a few years worth $ 3,000, or remain the same. Why sellers try to get rid of such a precious property. Maybe he has the incentive to sell, because he needs some money to repay some debt quickly. After some negotiation, you and the seller agree on a price, which may be higher or lower than the $ 2000 price tag.
Let's go to Wall Street. You want Yahoo! shares because you think Microsoft will eventually win control of the company and get a better price today for the deal. Sellers know this, so millions of other potential buyers. However, the seller wants to sell at the best price he can get, so that he can use the latest hot penny stock before the highest price. You are willing to pay $ 25 / share, the seller wants $ 26. Until you two are pricing, nothing happens. However, he may be willing to accept $ 25.50 if you are willing to pay the money to swap stocks
Then bad news hit Bill Gates and friends decide they want to buy another company, not Yahoo! . Suddenly, everyone wants to sell their Yahoo stock. Now buyers in the control, you can accept stock discounts. Perhaps a shrewd investor, let him call Carl, willing to 23 dollars to buy shares. He got a lot of revenue, which pushed the stock down to 23 dollars per share value.
Your real question is: how do you in the stock market Make money?