There are three ways that people make a lot of money and become rich: by starting a business, by investing in real estate and by trading stocks on the stock exchange. In this article we look at how you can make money by buying and selling stocks.
There are two ways to earn money on the exchange. First of all, we’ll discuss a method that you can use to generate a decent income in the short term. This is the fast trading of stock which is possible through an online broker. By buying and selling stocks fast, you simply buy the stock to then sell it a day or two later.
You can earn quite a lot of money short term when you do this patiently and systematically. When you go long (buying) you make money when the price goes up and by shorting (selling) you make money when the price goes down. This form of trading is very profitable; it is the best way to generate an extra revenue stream.
Do you want to try out trading stocks yourself? Open a free demo account with a broker and see if you can trade profitably by buying and selling shares!
Trading long term
It’s also possible to buy stocks as a long-term investment. When you physically buy stocks, you can only make money when the price goes up. You can’t short. Physically buying and holding stocks is something people do to get a certain amount of profit over the course of a few years.
A benefit of investing this way is the fact that you’ll receive dividends on your stocks. Dividends are a form of profit sharing where the board of the company determines how much dividend you get. The amount that you receive depends on the economic situation and how well the company is doing.
The best strategy for trading on the stock exchange
If you want to make serious money on the stock exchange, it’s best to combine strategies. Earn money short-term by trading fast on the stock exchange. With the income you generate you can pay the bills, go on holiday or buy new clothes.
If you invest the money that is left in strong, valuable stock, you can generate a very valuable revenue stream. By securing the shares, you can create a steady flow of dividends so you can work a little less.
Earning money on the stock exchange requires insight
Keep in mind that earning money on the stock exchange requires insight. Earning money short term is a totally different approach than trading long term. You need a lot more volatility short term to make money because you can profit from both an increase and a decrease in price. Any movement is good when you’re shorting.
However, if you want to build up your portfolio with long-term stocks, you will have to focus on different criteria. As you will keep the stock long term, the short-term price fluctuations don’t matter. Check profitability, research the market and try to predict the future to determine if the share is worth its price.