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| stock market |
Hello dear friends.
I am launching a
short tutorial on working in the stock market, this material is the first in a
series of articles. More than 7,500 instruments are traded on the stock
market, it is difficult to figure out how and what exactly to trade without
third-party help. My course is the kind of support that most beginners
lack.
After completing it, you will receive answers to all questions, learn how the stock market works, who works on it, who regulates it, and how you can earn money on it. If before you were confused by the external complexity of the stock market, now is the time to put your doubts aside and take the first step to success.
What will be discussed
This is the first lesson of my mini-course, so today I will focus on general questions. Below
we will talk about the fundamental questions of interest to beginners.
What is the stock
market and what is traded on it? I will tell you in more detail what
instruments you will have to work with, due to what and by whom the profit is
generated.
Stock market
device. Let's analyze everyone who is involved in the work of the market.
Regulation. Unlike Forex, the stock market is highly
regulated. You will find out who performs the regulatory function and what
it is.
Benefits. As an interim conclusion, let's look at
the strengths of working in the stock market. There are significant
differences from Forex, they cannot be ignored.
In the following
lessons, I will dwell on the selection of stocks for trading, patterns for
trading, and ready-made trading scenarios. This is enough to make money.
What is the stock market
The
stock market is the platform where stocks and bonds are traded. Real
people act as sellers and buyers.
For clarity,
imagine a standard market where vegetables are sold, for example. Buyers
approach traders, ask about the price if it suits them, make purchases of
different volumes.
Exactly the same
thing happens in the stock market, only instead of vegetables and fruits, work
is done with stocks and bonds. And you don't need to go anywhere, orders
to buy and sell securities are given remotely.
The
stock market is the platform where stocks and bonds are traded. Real
people act as sellers and buyers.
For clarity,
imagine a standard market where vegetables are sold, for example. Buyers
approach traders, ask about the price if it suits them, make purchases of
different volumes.
Exactly the same
thing happens in the stock market, only instead of vegetables and fruits, work
is done with stocks and bonds. And you don't need to go anywhere, orders
to buy and sell securities are given remotely.
What is traded on the stock market
Above I said that
the work is carried out with stocks and bonds. Shares are an understandable
tool, they can be called a part of the company. By purchasing securities
of any company, the investor becomes the owner of part of its business.
Bonds are a debt
instrument, with the help of which the issuer attracts borrowed funds on
mutually beneficial terms. These securities are more reliable than stocks,
but give lower returns.
Another specific
instrument is ETF stocks. I will analyze it in more detail, since not
everyone understands ETF features well. It is more convenient to do this
using an example.
Imagine that you
are an American investor and want to invest in the Chinese market, that is, buy
shares of Chinese companies. Already at the preparatory stage, you face
difficulties - you need to open an account in a Chinese bank.
Now imagine that
a fund enters the market, let's call it X, and is buying up securities of the
largest Chinese companies in huge volumes. The fund does not stop there
and issues its own shares under the security of these shares. Further,
this fund goes through the listing procedure, for example, on the NYSE.
Now, to invest in
the Chinese market, it is enough to buy shares of the X fund.
Above I said that
the work is carried out with stocks and bonds. Shares are an understandable
tool, they can be called a part of the company. By purchasing securities
of any company, the investor becomes the owner of part of its business.
Bonds are a debt
instrument, with the help of which the issuer attracts borrowed funds on
mutually beneficial terms. These securities are more reliable than stocks,
but give lower returns.
Another specific
instrument is ETF stocks. I will analyze it in more detail, since not
everyone understands ETF features well. It is more convenient to do this
using an example.
Imagine that you
are an American investor and want to invest in the Chinese market, that is, buy
shares of Chinese companies. Already at the preparatory stage, you face
difficulties - you need to open an account in a Chinese bank.
Now imagine that
a fund enters the market, let's call it X, and is buying up securities of the
largest Chinese companies in huge volumes. The fund does not stop there
and issues its own shares under the security of these shares. Further,
this fund goes through the listing procedure, for example, on the NYSE.
Now, to invest in
the Chinese market, it is enough to buy shares of the X fund.
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How ETF Funds Work
Imagine having to solve the same task manually. It will take a long time to buy shares, it will take a lot of capital since some securities cost over $ 1000 per share. In addition, the “weight” of individual companies in the index is changing, and rebalancing will have to be done. In the case of ETFs, the manager makes the adjustments and takes a small commission for it.
ETFs are there for literally anything. With their help, one can invest in the economies of individual countries, focus on economic sectors, and hedge risks. This is the best investment tool.
How the stock market works, who regulates it
The films usually
show how the main character enters the stock exchange building and falls into
complete chaos. Hundreds of people are shouting, signaling something,
rushing around the site. Everything looked something like this until 2005.
In the period
2005-2007. The NYSE has moved to a hybrid market. After this
innovation, the stock exchange became the ECN (Electronic Communication
Network). ECN is an electronic network through which an asset is traded.
Whereas before the
bulk of the trade was done “on the floor,” now everything happens on the Internet. The
"floor" of the exchange has lost its significance, people are still
there, but this is more a tribute to tradition than a real necessity.
When trading, one
of the trading participants sends a request, for example, to sell shares on
some ECN. You see liquidity for all ECNs in the Level II window and want
to buy securities of the same company, send an application for any ECN. If
there is a counterparty, the deal is concluded; if there is none, the order is
redirected to another ECN where there is a seller. It takes a split
second.
NYSE from the
point of view of regulation is the best exchange in the world, fraud is almost
100% excluded. Several organizations act as regulators.
SEC (Securities and Exchange Commission). Controls the transparency of accounting
documents submitted by companies. This is necessary so that companies do
not mislead ordinary investors by manipulating financial indicators.
FinRa (Financial Industry Regulatory
Authority). Roughly
the same as the SEC, but the emphasis is on the fact that insider trading is
not conducted, trading rules, in general, are respected.
Every trader who
trades on the American stock market pays contributions to both the SEC and
FinRa. A small commission is included in each trade. If you trade
with an American broker, then each account is insured for $ 500,000. In
case of problems with the broker, the trader will not suffer financially.
Stock Market Benefits
Before analyzing
the advantages, I will mention an important disadvantage - a high entrance
threshold. We have addressed this shortcoming by giving our trained
students money to run. With a capital of $ 90,000- $ 100,000, the problem
of the initial deposit disappears by itself. The only condition for
receiving money is to complete training and pass an exam.
Now for the
benefits.
Working hours. Due to the difference in time zones, the
NYSE opens in the evening and closes closer to midnight Moscow time. Having
come from your main job, you can trade, you find yourself in the active phase
of the market.
Adjustability. Cheating is impossible, this is the most
regulated market on the planet.
Set of tools. The American stock market provides room
for maneuver due to the huge amount of assets. Any idea can be worked out.
The US market is the "richest"
one. High liquidity
allows you to enter the market with any volume without fear that there will be
no counterparty for the deal.
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New York Stock Exchange is the most attractive in terms of liquidity
Head over to finviz.com and estimate the average
daily trading volume for Bristol Myers Squibb Co. On average, 10.39
million shares are traded per day. This means that Jim Simons owns almost
3 daily volumes.  Now imagine that Simons decides to drastically cut his stake in this company. A supply-side imbalance is guaranteed to crash the Bristol Myers Squibb Co. This is my way of working - looking for a major player and working in the same direction as him. This is a win-win tactic, we'll talk more about this in the next lessons.
Conclusion
On this I say goodbye to you for a while, success in trading and see you soon |
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