The stock market can be defined as an investment system: it is a system operated by an organization, that has the mission of facilitating savers who have financial capacity (whether individuals or organizers) and companies that require financial capacity to negotiate with each other. Savers and companies carry out securities purchase and sale operations, and the Stock Exchange ensures that all users who participate in it have all the facilities to operate.
The clearest example is that of the shares of a commercial company. The Stock Exchange allows a company to put up for sale the securities into which its capital is divided (participations in limited companies, shares if it is a public limited company). Simultaneously, investors can participate in the capital by purchasing these securities.
The fluctuations in the value at which these shares are bought and sold are due to the greater or lesser demand for their purchase, and this is where certain operations such as online trading come into play. Since these operations are constant, and anyone can buy shares today to sell them tomorrow, the profits or losses of stock market investors are in the differences in the price of the securities between the price at which they bought it and the price it has at a certain moment.
Why does the stock market go up and down?
The greater or lesser demand for securities can be caused by very diverse factors: the company’s profits and losses, expectations, the general situation of the sector, or the general economic situation exerts a great influence on the value of a company’s shares.
Other times, the causes are completely unforeseen factors. We have verified this in recent years. As a consequence of the crisis generated by the new coronavirus SARS-CoV-2 pandemic, many stock values suffered a collapse. The Ibex 35, the benchmark stock index in Spain fell almost four thousand points in a few days. A drop that was around 40% of the market capitalization, that is, of the value of the titles and securities traded in that market.
This shows that the stock market is an environment with a high dose of uncertainty. It requires training, information, agility, and the awareness that there are a series of uncontrollable factors. Therefore, investing in the stock market and being successful is a complex task. It is always possible to know someone who knows someone who says that they did very well investing in the stock market. It is possible: there are people who are successful because they once got lucky and found a stock that rose a lot and won on the stock market. Furthermore, it must be taken into account that the Internet has made investing in the Stock Market within the reach of anyone. However, these types of experiences can happen once, and for every case of success, there are several cases of failure.
On the contrary, those who win in the Stock Market tend to be very prepared people, who have thoroughly analyzed the stock market and the possibilities it offers, and who have had the wisdom (and often a pinch of luck) to invest at the right time. The only recipe that allows you to invest in the stock market with certain guarantees is training. Investing in the stock market is a risky operation for which it is advisable to be very prepared before making decisions.
How to learn to invest in the Stock Market?
Learning to invest in the stock market from scratch requires dedication, patience, and effort, but it is not impossible. Many people have trained as traders in recent years. Trading is a type of stock market operation that allows you to observe market fluctuations in real-time and operate in them on successive occasions on the same day, obtaining a return as a result of the different valuations between the moments of purchase and sale. For these operations, it is necessary to use a platform. Capital is usually secured because so-called stops, or reference values, are used to avoid losing after reaching a certain limit. If you know the financial market and have training in stock market analysis, these types of investments can be very profitable.
A very interesting option is to take a good basic trading course. There are online trading courses with a complete program, which allow you to obtain the necessary training to make this type of investment, especially with indices and future currencies. These courses are usually aimed at people without prior knowledge or at people with an advanced level who need to review and establish certain concepts and acquire a reliable investment method. These are courses that have a theoretical module (generally video explanations) and an important practical part. They can normally be done online, and help you enter the market while limiting risk exposure as much as possible.