Shares for Dummies: How to Get Started
You’re interested in investing in shares but simply don’t know where to start? You feel overwhelmed by the sheer amount of information and abbreviations in the stock market, such as P/E, MA and EBITDA? If the answer is yes, then the following lines are for you where we explained the major concepts to get started with shares as soon as possible.
What’s a Share?
Contrary to what you may think, by owning a company’s share you don’t become a minor owner of the company. Publicly-traded companies are treated as legal entities by the law, and legal entities own their own assets, earnings and debts. What you get by buying a share is the right on a percentage of the company’s future earnings (distributed as dividends), the right to vote on shareholder meetings and, in the unlikely event that the company ceases to exist, a right on the company’s assets.
In addition, you have the right to sell your share on the market to a buyer who’s willing to pay the current market price. If the current price is above the price at which you bought the share, you’ll make a profit. It’s as simple as that.
How to Sell a Share for a Profit?
That’s the million-dollar question that all beginners in the market have. The truth is, although we don’t know where the price is heading in the future with a 100-percent certainty, there are a few techniques to help us determine whether the price shall rise or fall.
Technical analysis is one of those techniques. It uses the share’s price-chart to identify common patterns that happened in the past, which can be used to anticipate the future price-action. One of the main premises of technical analysis is that all relevant market information is already digested in the share’s price, so there is no need to follow any other news and information despite the price-chart.
Another popular technique to predict the future price is fundamental analysis. Unlike technicals, fundamentals try to calculate the share’s intrinsic value based on the company’s future market outlooks, management capabilities, new products and expected earnings. Fundamental analysts also follow market news about the company to determine whether there will be increased demand for a share – and increased demand for any commodity usually leads to a rise in its price.
Alright then, how can you start trading stocks?
Fortunately, all you need to start trading stocks is a computer, internet access and a brokerage account. PrimeCFDs is one of the top-rated brokers for beginners in the market, as it features top-notch customer support, educational material and a user-friendly trading platform. In addition, there are literally hundreds of securities you can trade with PrimeCFDs, ranging from the world’s most popular shares and indices, to commodities, currencies and cryptocurrencies. PrimeCFDs handles new accounts, deposits and withdrawals lightning-fast so you can place your very first trade earlier than you think!