The stock market is the best wealth creator in the entire world, yet remains a confusing concept for a lot of people.
Most people don’t know the stock market basics.
When it comes to investing, where do you start? How does the stock market work? It’s difficult to pick a single starting point with so many investing strategies out there.
But that’s okay.
Today, we’ll cover the basics such as how the market works, how to learn to invest, and how beginners can get started.
Learning to invest is like learning to speak a new language. When you first start out, it can be a challenge. First, you need to learn the basics of the language. Then you need to practice the language. Eventually, you can speak a new language well. The same is true with investing.
The best part of learning to invest is that once you learn to do it, you can do it for the rest of your life.
There are things about the stock market that everyone should know. In this video, I detail a few stock market basics and how the stock market works so you can make wiser investments.
It will be perfect for you if you’re a beginner whom is just starting out.
You should also know this introduction to investing course can help test your investing literacy to figure out where you are right now.
What is Stock Trading?
A stock is a very particular type of security that gives owners (also called “stockholders”) a share of ownership in a company. In other words, when you buy a stock in a company like Apple, you then own a tiny piece of that company from an investment perspective. When the value of your shares increase, so does your return on investment.
What is the Stock Market?
The stock market is not actually a physical place of any kind – instead, it’s a vast network of economic transactions where buyers and sellers trade stocks with one another. Generally speaking, most people use the term “stock market” to refer to the total collection of various markets and exchanges where these activities take place.
How Does the Stock Market Work?
From a certain perspective, the stock market is not unlike an auction house. The market itself offers an avenue for buyers and sellers to negotiate prices for shares and eventually make trades. Prices for stocks work on the basic principles of supply and demand. If there are more buyers than sellers for a stock, the price increases. If there are more sellers than buyers, the price decreases.
How to Invest in the Stock Market
Once you’ve determined your investing goals and calculated your overall risk tolerance, investing in the stock market is something you can do in one of two basic ways. You can either partner with a broker who will engage in buying and selling activities on your behalf in accordance with your goals for a fee, or you can use an online brokerage firm and do all the buying and selling yourself.