Investing for Beginners: How to Make Money on the Stock Market

Investing for Beginners: How to Make Money on the Stock Market

One of the most significant and integral parts of the modern economy is investing. Investing means injecting money into the economy, both in the real and virtual sectors. It is a two-sided process where investors seek opportunities to multiply their capital by investing in various projects, while companies, different projects, and startups receive the funding they need for development. That is why the investment climate is so important for countries, and for the same reason, many large companies go public through IPOs. Investing is the only way to use capital effectively since idle funds continuously depreciate.

Investment tools can include real estate and equipment, copyrights and patents, purchasing land and established businesses, science and education, securities and currencies, precious metals and raw materials, as well as providing loans. The main principle is that investments must generate profit.

It is essential to understand that money is merely a tool, an instrument for realizing your plans and ideas. Investing helps turn your savings into a tool that generates greater income for you.

In essence, an investor is the same as a trader on the stock market, mainly working on purchases. Traders rely on technical and fundamental analyses of short-term movements: if the market is rising, you buy; if it's falling, you sell. Investors prefer to use long-term trading strategies and form their own securities portfolio, which, over a year or more, will yield them profit, even if smaller than day trading. Essentially, investors buy a share in a business, anticipating the company's growth. Most often, when investing in a specific company, professionals rely on fundamental analysis.

An investor differs from a trader by the investment horizon. For an investor, the term of investment in a project can be measured in years. The advantage of investing is lower volatility in the yield curve. However, there are also disadvantages — a fairly large capital is required, starting from $25,000.

Beginners mistakenly believe that investing is a kind of gambling, where everything depends solely on luck. However, with the necessary theoretical knowledge and skills, you will be able to track and choose the most profitable option for you. Investing is an entire science based not only on luck but also on analytics and statistics.

Investing capital in securities of various companies and enterprises is the most profitable and secure tool. There are a vast number of securities variations. Among them, the most popular are stocks, options, ETFs, ETNs, and ADRs.

To ensure your investments are not unprofitable, you need to study the company you plan to invest in, the market it operates in, the country’s economy, and consider many other factors.

Today, the U.S. stock market is rightfully considered the most liquid, reliable, and accessible for capital investment, as it features leading global brands, and most large companies strive to establish themselves here. The most well-known U.S. stock exchanges are NYSE, NASDAQ, and AMEX, which showcase stocks of companies from all economic and industrial sectors, as well as financial instruments derived from stocks.

Where to Start Investing in the Stock Market

Unlike Forex trading or binary options, which resemble betting and gambling, trading on American stock exchanges is rightfully considered a profession with over a century of history. The regulation of the U.S. stock market is quite strict, making it significantly harder to enter compared to opening an account on Forex.

To start working on the stock exchange, you need to open an account in the stock market. The simplest way is to open an account through a brokerage or proprietary trading company.

Then, it would help if you got well acquainted with the trading software since trading terminals for NYSE and other platforms may resemble an airplane cockpit for someone used to MetaTrader.

After that, you should begin basic training, learn to read and understand stock market analytics, and, even better, prepare your daily research before the trading session starts. This requires a serious approach and a certain amount of time and knowledge — which is also a kind of investment. To get familiar with the trading platform and tools in detail, we recommend opening a demo account, allowing you to avoid losing capital during the initial stages of learning the trading profession.

If you are determined to engage in investing and approach it with due seriousness, our specialists will provide you with a free consultation, quality analytics, and answers to all your questions about trading on the U.S. stock market.