what is stock exchange
what is stock exchange, or, in other words, the market of securities, gives the investor the possibility to receive income, trading in securities. There are two approaches to the use of stock market investing and trading.
Division is conditional, but rather properly reflect a difference in the approaches. Investing is a long - term investment in securities perspective of the enterprise. Trading is an attempt to quickly earn on a difference of the prices of purchase and sale of securities.
The main "strategy," standard offered to the population, is to buy the shares. This strategy is based on a simple premise: "stocks always go up in price." At first sight this statement seems credible and that is why most of the beginners investors believe that the purchase of shares is the main way to obtain investment income.
In fact, all of the above is only a half-truth. If we consider these statements more carefully, it becomes clear to them the half-heartedness.
what is stock exchange, the First: the purchase of shares - this is not a strategy. Any investment strategy should include obtaining profit. The purchase of shares is a procedure of return of money, but not receiving them. Seriously consider removing the income by way of receipt of dividends is impossible, as their size is usually 2-3% per year, which is considerably below the level of inflation. Thus, the strategy should include the sale of the shares. The difference between the sale and purchase of the shares and is the main income of the investor.
Sophisticated investors before the purchase of the shares should determine for itself as the entry point (the purchase price of the shares), and the exit point (the sale price of the shares). Once again, any investment strategy must include the point of entry and the exit point. And this is determined by the amount of possible investment income.
what is stock exchange, the Second: shares grow in price is not always the case. Indeed, stock prices of the major companies usually grow over a long period of time. The price growth may continue for decades. But always to replace the slow growth comes fast and powerful recession.
The decline or collapse of the securities market rare phenomenon and therefore not taken into account by an overwhelming majority of investors. Even if there are clear signs of impending catastrophe. Such carelessness leads to the ruin of almost all small and medium-sized investors. This is due to the fact that the usual security measures used in the stock market, such as stop-orders, do not work in the case of a panic.
But there are ways to protect their investments in securities of a potential collapse, as well as there is possibility seriously earn on a similar decline
