Stock Market
stocks, shares, and equities work in a similar way to a marketplace, where parties negotiate a price at which to exchange an asset. Institutions known as stock exchanges facilitate the exchange of publicly listed shares
invest in shares, purchase the underlying share itself, and seeking to hold it over the long term. If a company grows and its value increases, then the value of its shares will also rise, and you can sell your holding for a profit. In the meantime, you would receive dividends and voters’ rights. However, if the company decreased in value, the share price would also fall, and positions may result in a loss.
the stock market is dynamic and presents many options for traders. Stocks are usually considered suitable for medium- to long-term investments. Each stock is affected by different market events and could go up or down in value following announcements such as earnings reports, new product launches, and changes in competitors’ stock prices.
Buying stock by opening a BUY (long), means you are investing in the underlying asset, and the stock is purchased and held in your name.
Selling stock by opening a SELL (short), means you are selling in the underlying asset-you could benefit from a declining share price, not just a rising one.
Stock prices are mainly affected by internal factors, such as financial statements and other corporate activities (dividends, share splitting, etc.)
Stock prices may change abruptly, on a daily level. These fluctuations are usually sharper compared to the foreign exchange market.
earnings season is one of the most anticipated points during the financial year for the market. It refers to the months when quarterly reports are released—generally in January, April, July, and October. And with the hype of the season comes a slew of analyst expectations, forecasts, and results from that beat or miss those expert analyses trading due this period can be very interesting :
Some companies report before the opening of the trade, or at the end of the trading day, – which means that the price will open in the gap: up or down
If you use a broker that gives you high leverage you can use it to your advantage
PS – Keep in mind that this may also work against you
Example:
Tesla reports after trading at the end of the day when the market is closed
The share price at the end of the trading day was $ 700
As soon as the reports are published, the price jumps by 7% – which reflects a share price of $ 749
If you buy a Tesla share without leverage, you will earn 7%, assuming that the share price will be $ 749 at the start of the trading day.
You earned $ 49
Suppose you use broker services that give you 10 times the leverage
You bought 10 shares for the same amount
You earned $ 490
