how to make money on stocks?

 

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.

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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.

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.

 

 

How ETF Funds Work


There are thousands of ETFs, including those for the US market (ETFs with the ticker SPY, whose shares are backed by securities of the 500 largest US companies). By purchasing shares of this fund, you automatically invest in the entire American economy.
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.


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

The stock market provides an order of magnitude greater opportunities compared to Forex. Thousands of instruments are traded here, for many of them there is good volatility, which allows you to make money both within the day and during medium-term trading. As for the complexity of the stock market, it is rather an illusion, after the first acquaintance it disappears, and the beginner understands that trading is easy.
On this I say goodbye to you for a while, success in trading and see you soon
 

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