Main elements of financial health; can be summarized as earning, saving, investing and protecting money. At this point, the challenge for all of us is to invest. Because whether or not we can make a profit is preoccupied with our minds. In addition, investment has a certain level of risk.
Leaving aside other methods, we can think that the stock market is the safest way. Because it is a formation that has existed for years. It also gives confidence that it has a variety of control mechanisms. Namely, while cryptocurrencies offer crazy profits, we want to sell the house and enter the car. However, the thought that it could disappear suddenly stays in our minds. The fact that the output speed and the decrease are the same proves this.
Our aim in this article is to explain the stock market in the most understandable way. Even if you know nothing or little about it, you will have learned the logic of the market by the end of the article. So you can decide if you want to invest.
Here is the information we have prepared for you:
1. As the word "What is the Stock Market?"
The stock exchange is the place where commercial goods and valuable documents are bought and sold by buyers and sellers. This is the exact equivalent in word.
Let's elaborate a little more. Here, the shares of public companies, bonds, bonds, funds and commodities are traded. Investors are made up of buyers and sellers. When trading a share to buy a buyer, the seller sells the stock in order to take profit.
As the word "What is Stock Market?"
While each of these transactions takes place electronically, intermediaries transmit the orders to the market. The buyer determines the highest price, the seller determines the lowest price. Brokers also take these orders and send them directly to the market.
In this way, the stock market is a mechanism by which supply and demand are created and prices are formed. It is complex but based on simple logic. It works around certain rules and establishes the link between the buyer and the seller who makes the trade. NYSE, Nasdaq, Euronext Paris; each of them is stock market. All of them have their own characteristics. There are also indicator indices.
Indices such as S&P 500 and FTSE 100 are the main reasons for the news "the stock market fell, broke a record". Because these indexes follow the stocks of important companies. The movement seen in these stocks, while moving the index, gives information about the general state of the market.
This is one of the most important issues you should know as an investor. It is possible to have an idea about the market according to the fluctuations in the indices.
2. What are the Basic Functions of the Stock Exchange?
The stock market is where everyone can access the shares of public companies.
What are the Basic Functions of the Stock Exchange?
Buyers and sellers meet here to buy and sell these shares. Since there is a certain control mechanism, they can safely evaluate their money.
It has 3 basic functions in general. These;
Buying stocks: Anyone can buy stocks, regardless of whether they are a daily, individual or institutional investor.
Selling stocks: The buying process, as possible, provides a suitable environment for the sale to take place after having a certain profit.
Stock issue: When a company wants to raise money, it decides to sell some of its property on the stock market. This transaction is called an IPO. The company opens its shares to the public through public offering. This way, both the company and investors earn money. Their functions are of course not limited to these, but knowing that much is enough for now.
3. How does it work in the stock market?
The most basic information about the operation; to make a profit by buying when prices are low and selling when prices rise.
So how do you make money in a market that works this way?
Let's explain it in the simplest way with a shopping: You bought the product, the price of which decreased with a discount or any campaign, for $10. Let's say you sell this product on the internet or elsewhere for $15. The $5 difference is your profit. This is the same in the stock market.
In addition, you do not need to search for buyers and sellers to make this purchase and sale. Your brokerage firm does this job for you. You sell a stock or gold that you buy at a low price when its price rises. The difference between buying and selling is your profit. Knowing when and why prices are falling is the most important research you need to do.
4. Why Do Prices Fall - Soar in the Stock Market?
Prices formed in the stock market vary based on two factors that we call supply and demand. If you follow the news that prices are falling because demand is decreasing and supply is high, you will hear.
Why Do Prices Fall - Soar in the Stock Exchange?
The price decreases due to the high production but the lack of demand at the same rate. If we think the opposite; When production is limited and demand is high, the price will rise. Changes in supply and demand will cause prices to fluctuate in this way. Of course, there are some factors that affect this balance.
Many reasons such as the decrease or increase in per capita income, increase or decrease in the unemployment rate, problems in the economic growth of the country, interest rates and inflation will affect the purchasing power of the people and cause the supply and demand to change.
By learning this data and following the developments, you can easily comment on how prices may change in the future.
5. Are There Risks Against the Stock Market?
Of course there are risks here too. Moreover, if you are making this investment, you should consider both long and short term risks.
The prices of the shares can rise or fall suddenly. This is an indication that the stock market contains risk factors. Of course, sudden movements are often blocked by circuit breakers. However, this indicates that you need to change your portfolio.
You should consider the existence of these risks to make your investment decisions. You cannot act like there is no risk. After all, you are investing a lot of money in this business, and as with other jobs, everything can end badly here.
6. How Does the Stock Market Work?
The stock market actually works like an auction center. This will not be wrong at all, considering the determination of prices.
How Does the Stock Market Work?
Buyers want to buy at the lowest possible level. In this way, they propose a price they are willing to pay for a share. This is called the "best buy offer".
Sellers also aim to increase their profits by selling at the highest price. Sellers bid the price they are willing to sell the stock they hold. This is called the "best selling offer". The difference between these two offers is called the spread. The two sides negotiate to meet in the middle. The companies that mediate these transactions also receive their fees from this difference.
While tracking stocks, you will see prices move. This is directly related to the number of investors willing to buy or sell. At the same time, the number of these procedures is also effective in mobility. Transactions take place on an individual basis by negotiating the purchase and sale prices of the shares.
7. Who Uses the Exchange?
Important games available in the market can be listed as follows:
Individual investors: They are investors who purchase and sell individually through a brokerage account.
Stockbrokers: They are registered representatives who have received training on this subject and have passed the licensing exams. These people can buy and sell securities on behalf of investors. They exist as intermediaries in transactions.
Brokerage houses charge a certain fee from customers for brokerage and trading.
Portfolio managers: They manage large portfolios that investors may have. For this reason, they make large trades. Later, they become responsible for the management of this portfolio.
Investment bankers: They help companies list their shares.
8. What to Invest in the Stock Exchange?
We generally commemorate the stock market with shares. However, it is home to many more instruments. There are different markets and markets for these.
What to Invest in the Stock Exchange?
Under these markets, there are markets and various products. These are all instruments that investors can use.
In short, the instruments that can be invested; stocks, bonds, bills, repo, eurobonds, warrants, exchange traded funds, real estate certificates, futures contracts, options contracts.
9. How to enter the stock market?
In this article where you know the market, we would like to briefly mention how to enter the stock market.
To start trading, you need to open an account with a brokerage firm. You make your investments through this account. Therefore, do not neglect to master all the details about the account.
You must open the investment account from the brokerage houses and banks that you will control from the Capital Markets Board (CMB) page. It is important that you work with an institution authorized by the CMB.
When opening the account, you must read and sign the framework agreement and risk reporting form. Unlike other conventions, we recommend that you read them literally.
After this stage, your account will be ready to invest. You deposit the amount you want to deposit. Then you can start buying and selling stocks if you are interested. If not, you can examine the market and sectors for a while and determine which ones you want to invest in.
10. Why Invest in the Stock Market?
You have a certain income and this income is barely enough for your livelihood. Investing is at the top of the list of ways to increase income.
Income can be increased in different ways, such as making money on the internet, owning your own business with various initiatives, doing additional jobs in areas of expertise other than the current one.
Why Invest in the Stock Exchange?
Of course, in order to be successful in all these matters, you must have knowledge of money management. At the same time, did you think of being a partner of a company that would be valued in the future by investing?
If you are a conscious farmer who follows the news about gold, oil or dollars or is engaged in agriculture; You will have more or less information about the future prices of the products belonging to the fields you are interested in.
Can you imagine that a farmer does not know how much the wheat he sows will be sold at? This is a simple stock market logic.
The farmer sows, reaps and waters his product by creating favorable conditions from today, showing all the necessary attention. When the time comes and the crops grow, it's time to sell and earn money.
Maybe he will earn $100 when he matures from the wheat seed he bought for $1!
You make your purchase today when the prices are low and there are favorable conditions. You will make a profit by selling the investment vehicle at the rising prices when it is due. What you need to do at this stage is less than the labor of a farmer.
Especially if you have information about economic developments and if you have interests such as automotive and fashion; you can easily invest in these areas.
In the stock market, investing in a promising sector of the future, in the shares of the company belonging to this sector; It can enable you to earn a higher profit when it comes to maturity. The first and most important step you have to take is to learn "what is the stock market"!
I'm sure you are one of those people who spend time on the internet, like many others. At this time, you can get information that will help you increase your income regularly. You can easily get information about the stock exchange on the internet today.
11. How to Learn the Stock Market?
If you want to make your investments in the stock market, you should know that this job will not be without knowledge and experience. There are many resources where you can get stock exchange training and improve yourself. You can use books, videos, and virtual accounts.
There are many printed books that give information about the stock market. We recommend that you read them. Stock market books will give you the most basic information about the market. You can learn all the details from investment tools to the way transactions are carried out. Platforms like Youtube are full of videos where you can learn about the stock market. By watching these, you can learn how to do the operations with examples. The videos will give you information about the details of the transactions.
How to Learn the Stock Market?
The thing you should be careful about when getting information from the videos is that you don't go looking for tips. If they give you information like buy X shares in the video, we recommend that you do not follow them. One of the best training tools that will prepare you for the stock market is virtual games. There are many game applications written on the stock market.
12. What Do You Need To Pay Attention To In The Stock Market?
There are some points you should pay attention to when trading in the stock exchange. Just as there is a subtlety of every business, there is a subtlety of naturally trading in the stock market.
To share these points with you briefly;
- Invest in the investment tool you know.
- Do not enter the stock market with money that needs to be repaid, such as debt or credit. Forget about the money you invested in the stock exchange and do not act according to the income you will earn.
- If someone is telling you to "win an A share," stay away from that feeling.
- Trade with your own investment strategies and don't let others influence your decisions.
- Do not trade from the top and bottom points of the price charts.
- When you reach the goal you expect, do not say "if I wait a little longer, I will earn more, I will get a little more thought".
- Don't be a hasty, impatient and unorganized investor. Be patient, take your time and research it thoroughly when you think you are facing an opportunity.
- Don't go the way the majority go. Do not buy or sell because everybody is selling or buying it.
- Research, observe, analyze and READ constantly!