Stock Trading & Investing: What It Is and How It Works
STOCK TRADING & INVESTING – The best guide for beginners in stock trading and investing.
Let’s say you want to buy a box of pizza, but you’re short on 100 pesos. So, you decide to have two friends chip in 50 pesos each in exchange for a few slices. In this analogy, those slices represent “stock.” Now, Noel and Angel, your friends, become shareholders by contributing money to buy the pizza together.
Stock trading is essentially about making money by buying and selling stocks. Whether you’re the company (pizza owner) or a shareholder (like Noel and Angel), money is made when actual stock (pizza) sales take place.
To invest in stocks, you follow a similar process to our example. Noel and Angel invested their money by buying shares of your pizza. To simplify, let’s continue with our scenario to explore the various ways to earn money from stocks.
How can you earn money from buying/owning stocks?
Later, friends of Noel and Angel expressed interest in buying the pizza from them. One friend offered Noel 35 pesos per slice, while Angel’s friend proposed to buy all four slices for 100 pesos (25 pesos each). They happily agreed, and both Noel and Angel earned a profit of 5 pesos per slice.
Similarly, in stock trading, you make money when the value of the stocks you own appreciates, and you sell them at a higher price than what you initially purchased them for. This is known as “Price Appreciation.”
Another way to earn is through “Dividends.” Some companies share their earnings with stockholders, and you receive this income in the form of cash or additional stocks.
Additionally, there’s an opportunity called “Stock Rights,” where companies offer their stockholders the chance to purchase shares at a price lower than the current market rate.
How to Start Investing in the Philippine Stock Market
Getting started in the stock market is simpler than it may seem, thanks to online brokers and cashless payment systems. Here are the main steps:
1.Conduct thorough research and understand the risks involved.
Before diving in, take the time to understand key concepts and the potential risks associated with investing. Continuous learning can help you make informed decisions and protect your hard-earned money.
2. Open a stock trading account with an online broker.
Most online stockbrokers have a straightforward process for new account holders. You visit their website, download a registration form, fill it out, submit it for approval, and then fund your account. Specific steps may vary among different brokers.
3. Fund your account and start trading.
Once your account is set up, you can begin funding it to buy your first stocks. From there, you can start trading in the Philippine Stock Market.
What can you say about this article? Leave your comments and reactions below.
Please like and follow/subscribe:
Philnews YouTube Channel
Philnews.ph FB Page
Viral Facts