It is a popular new year resolution, but investing in a stock market could indeed be an overwhelming decision for beginners – is it the right choice, and how can you get profits out of it? Here are a few explainers to help you start.
What is a stock market?
Investopedia defines stock as “a share in the ownership of a company”. Stock market acts as a platform where buyers and sellers exchange securities, such as shares and derivatives.
The price of stocks changes according to current demand and supply level. Depending on your investment goals, you could hold shares for a few weeks (swing trading) or buy and sell quickly after a day or less (intraday trading).
Is stock market right for you?
If you are risk-averse, probably not. The dynamic of stock market involves constant changes, and it would suit you only if you are comfortable with a level of risk.
Stock markets also work best for patient investors, whose judgments are not easily clouded by fear or greed. Sometimes it is best for investors to hold rather than quickly sell in hopes of great returns, which could induce panic and trigger bad decisions. Investors should also research the company properly before buying in instead of depending on big names. By learning about the company, investors will be able to analyse and expect changes in the market better.