What is a stock trading system and can it help you? Ready to quit your full time job and start trading full time? Can it be a source of consistent income? Its possible, but not likely. It takes a certain type of personality.
Before you jump into the world of penny stocks and software for stock trading lets look a little closer.
In its purest sense, stock investing is all about ownership in a business. There are 2 choices for a company when it wants to expand. First, they can take out a loan - which can be difficult if its not generating profits just yet. The second option is to sell shares to the company. When you become a shareholder, you become a part owner. As an owner, you profit when the company does well, and the value of your investment goes down when the company doesnt do as well.
Not every company is successful, nor is every publicly traded company popular. The higher the popularity, the bigger the demand for the shares. The stock market provides an opportunity to invest in companies that have a history of moving higher, increasing earnings and increasing dividends. Still others have been beaten down - providing value investors with an opportunity. While it might seem obvious that you should go for the former, there can be money to be made with the latter. A company who is growing their earnings will continue to grow that attention towards their company. The price of the shares moves up as a result of this demand. Typically, if there is lower demand for a stock, its tougher to get in, and more importantly, to get out. Not only this, the varying performance of a company in the market also causes constant fluctuations in its stock prices. This rise and fall in the prices form the basis of trading. The stock trader buys the stocks and expects to sell them when their demand, and hence price, increases. A trader aims to profit when the markets are rising and when they are moving lower. This entire process is stock trading.
The key is to develop a trading strategy that identifies these strong companies. Sofware can help identify these stocks.
Think the stock market will make you rich quick? Think again. It wont. If you have credit card debts, why not pay them off first? A lot of people have credit card debt - usually paying 15-18% interest per year. Why not pay off that debt first? Once you are debt free, then feel free to make smart investing decisions. In the meantime, why not paper trade to test your theories until you come up with a methodology you can call your own?
Is it possible to make a consistent retrun year after year?
If you are a beginner and have another job, it is not advisable to leave your job and take stock market as a full-time source of income. You'll find that even trading part time can be a challenge. In the present days, however, this is possible through the online stock brokers. Thirty years ago, commission costs were well over $100 - and that was just to buy - it was another $100 to sell. Thanks to the internet, you can buy and sell stocks just by clicking your mouse. Also, you can trade stocks and forex in your country and around the world. Perhaps its ease of operation is the reason for a large number of people are flocking into online stock trading. With such ease, you can keep your day job and trade stocks.
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