Trading Stocks

The reason you are trading stocks or any other asset class is, of course beacause you want to make a profit.

There are typically two ways to monetize on stocks.

One is if you buy and then succeed in selling the stocks at a higher price.

The second way is that you own and receive dividends from the stocks you hold.

All listed stocks have a price that you must pay if you want to own the stock.

The stock price reflects what price buyers and sellers are willing to buy and sell the stock at (the market price).

If a publicly listed company performs well and increases its profits, this will often be reflected in the stock price rising over time.

It is important to distinguish between the stock price and the actual value of a stock and a listed company.

When you buy a stock, it costs what it costs, but this does not indicate anything about the actual value of the stock or shares of the company you have invested in, and/or whether the stock is expensive or cheap.

If a stock costs EUR 10 and another stock costs EUR 500, this is by no means a measure of stocknvalue among themselves as a price is representative only of the individual company alone.

The so-called market value of any listed company is the sum of the number of outstanding stocks times the market price.

Hence, if a company has 1 000 000 shares and the share price is 250 EUR the market value of the company will be EUR 250 000 000.

If another company has 5 000 000 outstanding shares and the share price is EUR 200, the market value of this company is EUR 1 000 000 000.

In this respect, the share price itself can not alone decide when comparing the value of two companies.

This is an essential aspect of stock trading and investor Warren Buffet has decribed it very illustratively by the following expression:

THE PRICE IS WHAT YOU PAY, VALUE IS WHAT YOU GET”

– Warren Buffet

You can buy shares in any listed company. You can select sectors such as IT, energy, industry, etc. or you can choose to take advantage of copy trading and follow another trader.

This way you will automatically get the same shares in your own trading account as the strategy provider you are copying.

If you have any questions regarding the content in this article, pleas do not hesitate to contact us at; [email protected]