- Personal Finance
Advantages of Trading in the Stock Market
This is a short Hub to explain to people the advantages of trading in the stock market.
To many people, the stock market seems like a fantasy which is only accessible to large bankers and important financial gurus. But with the technology in the 21th century, everyone has the opportunity to indulge themselves in the stock market. Majority of the online brokerage firms offers instant execution, this allows people to invest as well as to day trade. The stock market can be extremely dangerous, if you are not careful, it can suck all the dollars from your account instantly. But if you work hard and learn the key knowledge, you can eventually make friend with the market. Some people refers to the stock market as a person with violent mood-swings, but those extremely mood swings are just opportunities for people to benefit from.
The stock market experiences many ups and downs. Sometimes it can go extremely high and sometimes it can go extremely low. Both are opportunities for traders and investor to profit from. However, sometimes the trend might last for years, and sometimes, they can be over within a few minutes. That's why most people consider trading in the stock market is no different from gambling in casinos. But the truth is that those wild swings are predictable and they can be taken as an advantage but not everyone has been trained to spot them. But in this article, I will focus on day trading and swing trading. They are considered to be highly risky by many, the one thing all traders and investors should consider is that no one is a hundred percent right in the stock market. Even the legendry investor Warren Buffett has made mistakes before. So it's important to realise that it doesn't matter if you lose from time to time, as long as you control your stop loss effectively.
Join the World of Finance
Trading in the stock market gives you the chance to be a part of the world's high moving financial sector without having to achieve a Harvard MBA, it is unarguably the easiest way to become a financer. The experience can be extremely rewarding and you will understand how the world works a lot better, because it involves the knowledge of supply and demand, a stock price will largely depend on the world politic and world leader's decisions. Sometimes, those kind of knowledge can actually help you in real life, whether if it's making a vital decision or just trying to socialise with friends or other professionals. It will also give you a broader view of the whole world.
Make a Profit and Live Your Dream Life
I'm sure many people jumped into trading after knowing the chances of making a fortune. Well that's true, it's quite possible to make from a few hundred dollars to a few thousand within a day. The biggest problem is that many people aren't aware of the danger of trading or the necessity of hard work. However, if you are successful, your percentage return can be mind-blowing. While other save investments can perhaps generate about five percentage of you starting capital (The realistic dollar return depends on the amount of money you have started with). Wile trading in the stock market can sometimes generate over one hundred percent per year.
Become an Owner
When you are buying a stock, you are actually buying into a particular company. For example, if you bought shares in Apple, it means you own a part of the Apple company. Many large companies pays dividends to investors who owns the company's shares. If you are a lucky trader who bought shares before the dividend date, you will receive money just because you have bought the stock. This gives you the chance to hold onto the stock if you believe the price of the stock is going to go up.
Above is just some of the advantages of trading, although some contains some investment context. But both trading and investing is very similar, but it just depends on how long you hold onto the stock. In trading, traders don't usually hold their securities for longer than two weeks. For investors, they usually hole onto their securities for as long as he or she wants. Trading normally focus on intra-day changes and traders can make some quick gains which they will hopefully add up in the future.