How to Make Money With Stock Trading?

make money with stock trading

How to Make Money With Stock Trading? Everyone has this type of questions. A trader can earn an average annual return of 10%-12% with stock trading. This return is more than what you can earn by depositing your money in a bank or investing in a bond. You can make huge returns from staying invested in the stock market, but most people stay in for a short period of time.

Investors deposit and withdraw money with the fluctuations of the stock market. On the other hand, if you stay invested, you can make huge profits. For several people, trading in stocks is their primary work, and it is the main source of income for them.

What is the Stock Market?

The stock market is the place where buyers and sellers of stocks meet with companies that are likely to sell their stake to the public. Investors cannot directly deal with the stock market, so a stock exchange plays intermediary roles between traders and the stock market.

When a company becomes publicly traded, its shares can be traded in the stock market from one buyer to another. Several companies are listed on the various stock exchanges, and their shares are traded daily.

Make Money With Stock Trading: How is the Price of a Stock Decided?

A stock exchange determines the price of a stock by analysing the demand and supply of the stock. Apart from demand and supply, there are various other factors by which a stock’s price is determined. There are two types of prices opening and closing.

Opening Price: The price of a stock when the market gets open is known as the opening price.

Closing Price: The price of a stock when the market gets closed is known as closing.

Role of the Stock Market

The stock market plays a vital role for investors and companies. It allows companies to raise capital from the market for day-to-day operations or for a company’s growth and development. Companies can collect a huge amount without asking for private funding.

Individual investors can also take advantage of investing in shares of a company. Investing their capital in any company will bring profits for inventors in two forms: dividends and capital gains.

Dividends: Any amount of profit earned by a company, if distributed to the company’s shareholders, whether wholly or partially, is known as a dividend.

Capital Gain: When the price of the stocks of a company rises, and an investor earns some profit at the time of selling the shares. That amount of profit is known as a capital gain.

Ways to Make Money with Stock Trading

The liquidity of the stock market is high enough to buy and sell shares instantly. Investors can make huge profits from trading in the stock market. Some of the ways to make money with stock trading are:

Don’t Wait for the Stock Market to Become Safe.

The stock market is volatile and faces daily ups and downs in the prices of stocks. If you are waiting to play safe, share market trading is not your thing. Investors have to grab opportunities that can bring profits to them. When you learn the stock market fundamentals, you can analyse when to enter and exit any stock market position.

Try to Stay Invested with Your Funds

The longer you stay invested in the stock market, the more stable returns you will earn from the market. It’s the habit of several investors that they withdraw their funds in fear of losing their money after a bit of fluctuation in the market. If the market is going down, it will rise and will generate good returns.

In short, if you will take your money out of the market, then the stock prices will fall. It is because of the demand and supply factor of a stock.

Do not Sell a Stable Stock.

If any stock you are holding is maintaining a constant price, it does not mean that it will not generate any returns in the long run. A stable stock can generate higher returns in the long run, whether in dividends or capital gains.

Investors think that this stock is useless, and they try to get rid of the stock because it is not generating enough profit according to their expectations.

Do not Wait to Get Stock Prices Lower.

Until you do not have strong research that proves the price of a particular stock will go down in the coming days, you do not wait for prices to fall. The worst scenario can be that you are waiting for a stock’s prices to fall, and the prices go up, and you lost an amount of profit.

In short, you should invest in any stock after conducting proper research. Investors do not invest without having a strong reason for investment.

Factors Affecting Stock Prices

Several international and national factors are responsible for the prices of a stock. A little favourable or unfavourable movement can make a huge change in the price of a stock. Some of the factors are:

Supply and Demand

It is one of the crucial factors that affect the price of a share in the stock market. The basic factor that is used to determine the price of a stock is supply and demand. It refers to the supply and demand of the shares of a company in the stock market. It is much like the supply and demand of any commodity.

Sentiments of Investors

The sentiments of investors also affect the prices of the stock market. If investors are putting more and more money in the stock market, the costs will rise, and if they are taking money out of the market, then the price will fall.

Interest Rates

Interest rates of the Reserve Bank of India (RBI) play an important role in determining a stock market’s prices. It reflects the factor that the companies have to pay more interest for the loan taken, which means they will get reduced profits.

Company Related Factors

Anything that happens in a publicly-traded company can affect the prices of the stocks of that company. Events like a new product launch, any foreign debt, change in the board of directors, and other similar events. These types of events directly affect the prices of the stock of a company.

Favourable events will bring a positive change in the prices of the stocks. On the other hand, unfavourable changes will bring an adverse change in the prices of the stocks.

Natural Calamities

Natural calamities can lead to the heavy destruction of an economy, and during the destruction period, the stock prices are likely to fall. Due to this, both companies and investors may suffer huge losses. The main reason is that the sale and purchase action of the public and a company changes during the calamity period. This will make the stock prices bound to fall.

Exchange Rates

The foreign exchange rates of a domestic currency against other currencies also determine the prices of stocks. It is also an essential factor because it represents how the domestic currency stands in the financial market.

Economic Conditions

Suppose a country is facing any trouble like a war, riot, and other similar activities. During these kinds of situations, the stock prices are more likely to fall due to these events’ adverse effect in the market.

Politics

The policies made by the government also affect the stock market and the prices of the stocks. The government take many decisions based on day to day activities. These decisions can fluctuate the prices of stocks.

Select Among Top Brokers

Traders should choose a reputed broker among the top broker across the globe. Some of the leading brokers are:

TradedWell

Some of the features of TradedWell are:

  • Commission-free trading
  • High leverage of 1:500
  • Trading platform: MT4
  • Multiple trading assets are available
  • A demo account is freely accessible
  • Wide range of educational materials

HFTrading

HFTrading is offering the following features:

  • Commission-free trading
  • High leverage of 1:500
  • Trading platform: MT4
  • Multiple trading assets are available
  • A demo account is freely accessible
  • Wide range of educational materials

101Investing

Leading features of 101Investing are:

  • Commission-free trading
  • High leverage of 1:500
  • Trading platform: MT4
  • Multiple trading assets are available
  • A demo account is freely accessible
  • Wide range of educational materials

You can further analyse and choose among these brokers depending on your requirements. They are offering multiple account types, and you should choose a suitable account according to your needs.

Make Money With Stock Trading: Final Thought

Investors can make money with stock trading in the market, but you need to remember to understand the market fundamentals. Make an in-depth analysis of the factors that affect stocks’ prices and start trading with top brokers in the market. If you are a trader, you should invest a portion of your daily time studying the market consistently. Anyone with proper knowledge can earn good returns.

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