A Guide to Entering the Stock Market as a Trader

In today’s world of economic recession, it is essential to find an alternate way to make your money grow. Salaries and finances are only so much, which you can barely sustain yourself on what you can make on a regular salary. While the traditional method of investing in savings accounts can yield you a small increase in your money, it doesn’t do much in helping you to save for the future.

The chosen way to make a bigger profit, and allow your money to grow significantly is through neowave trading and investing in the stock market. There are associated risks, but with a clear understanding of what to look out for and how to operate, you will be safe and find your money yielding more than what it would had it been locked away in a bank.

The pre-requisite: Understanding stocks

There is nothing too confusing about what a stock is and what is the elliott wave analysis. It is as simple as owning a share in a company. When you purchase a stock, you purchase a percentage of a share in that particular company. Now, should the market value of the company rise or fall, you as the owner will be proportionally profited or lose on the percentage of money you have invested in it. The more stock you have, the larger your profit or loss, depending on the market performance of your company.

You, and all the others who have invested in stocks of the company, are called shareholders. While you have a right to the profits and losses that are associated with the stock you own, you do not have any other right over the company, irrespective of how many stocks you own. The management of the company determines the day-to-day operations of the company, and this will ultimately result in how your stock value increases or falls over the course of time.

How do stocks work?

To understand this with the elliott wave theory, we should learn why stocks are available in the first place. Stocks are the way the company raises money for its daily activities. In a way, it is a form of borrowing money from someone in the form of a loan, and giving them a guarantee instead in the form of a stock. But, it is not exactly the same. The person, who invests in a stock, also takes a risk when doing so. It is debt financing, and the company is benefited because it doesn’t have to pay any money back to the stock holder should it incur any losses. Additionally, it doesn’t face the problem of raising money to pay for interests, as it would have to, should it take this finance from a bank or other financial organization.

“Risk” is a term that is often associated with the stock market. If your stocks do well, you earn a significant profit, but should the stock go in the opposite direction, you also stand to lose all your invested money and perhaps even lose more from your own money to compensate for this loss. Hence, there is a definite risk attached. But, the profit is very attractive and this is why many people choose to invest in stocks.