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What is stock trading?

September 6, 2022

What is Stock Trading?
Stock trading is an increasingly popular activity that allows you to trade in various stock markets. Here is what stock trading is and everything you need to know about this popular activity.

What is stock trading?
The word “trade” means “to deal,” so simply put, stock trading is the buying and selling of stocks of companies, commodities, and other derivatives. You can also trade on the foreign exchange market, i.e., trade currency pairs. The objective is always to earn capital gains.

How to Calculate the Value of a Stock
Before continuing, we need to familiarize ourselves with the concept known as “par value” before learning how to calculate the value of a stock. The number of shares of a company’s share capital divided by the number of shares outstanding is called the nominal value of the shares.

However, the nominal value does not necessarily correspond to the market value of the shares. This is because real value is the result of dividing by net assets, not by share capital. Also, the market value of a stock does not necessarily have to exactly match its nominal or real value.

When to Sell Shares
It would be nice if we could always sell at a winning position. But the market is sometimes unpredictable and our knowledge is limited. However, there are a few tips to keep in mind when selling stocks.

First, and I never get tired of saying this, but you should be able to calmly answer two questions.

If you take a loss, is it time to pick up the pieces? If we make a profit, will our stock go up more?

Remember the basic adage that a big rise in our stock means there is a chance it could go down. Evaluate whether there is more than enough profit, which is usually 20% to 25%. Also, consider whether selling this stock and doing it now is better than doing it later.

What you need to buy and sell stocks
Anyone can trade stocks, at least a priori. This is probably the mantra repeated over and over again, especially by stock market gurus. Remember, there are thousands of people just like you who want to profit and enter the exciting world. But to trade stocks, commodities, and currency, you need three things

Start-up capital: This depends on what you want to invest. It is always best to have a limited budget, and it should not be too much at first. If you don’t have the money, there are platforms, most of which have demo accounts.

Strategy: Your trading strategy will determine where you want to go and how you want to trade. There are many trading styles, each tailored to the investor’s profile and forced to trade one way or another. Knowing them well is the key to aligning your lifestyle with your investment style and acting in the best way possible.