How to make money on the stock exchange - tips and examples of strategies for beginners

The goal of any type of trading is to make as much money as possible. When looking for assets to trade, too often traders don't think about where their best opportunity to make a profit will be. They cannot adequately evaluate which option is better - stock trading or Forex trading. Traders tend to just pick at random and then follow the selection. However, it is a good idea to seriously think about which stock or Forex trading option best suits your investing style and your financial goals and decide whether you are better off trading Forex or stocks.

stock exchange stock quote

Stock quotes on the stock exchange change freely. At the same time, prices are registered by a special commission, or committee - quotation commission. In this case, as a rule, changes in the exchange rate (price, interest rate) of shares on the stock exchange change during the exchange session (day), and only the price (quote) at the time of the opening of the session and its closing at the end of the day is published. The publication is called the official quotation.

The quotation reflects interest in shares and its changes, identified based on the volume of supply and demand.

There are several types of quotes: there is direct and reverse. Direct – the cost of a unit of stock in monetary terms. For goods and when exchanging currencies, a reverse quotation is often used - how many units of a product can be purchased for a certain monetary unit.

Results

If you have a lot of money, a large five-figure sum in US dollars, and you have a long time horizon, you can probably make the most profit by buying real stocks through a stockbroker. At this level the commission/spread is much more reasonable because it is a fixed dollar amount.

If your account is smaller and you want to trade on shorter time frames or only on a daily basis, then you will likely have a better chance of trading Forex through a broker, which you can find in our list of the best Forex brokers. However, if you've done your research and really favored a few individual stocks in a bull market, you can probably benefit from short-term holding of those stocks, but you have to be very careful in managing your money.

Placing shares on the stock exchange

The placement of a company's shares on any exchange is called an IPO, or initial public offering. After the initial placement, they begin to trade on the secondary financial market. Placing, as a rule, is necessary for the company itself - to confirm its status and financial significance, to attract significant investments by selling shares at a higher price. A side benefit of going public (Initial Public Offering) is that you need to attract specialists, most often top management, who, in addition to the basic payment, are also offered company options. Likewise, by listing shares, it is easier to attract investors.

Attention. Shares - their issue must be approved by the relevant government agency (in the Russian Federation - the Central Bank, in the USA - the Securities Commission). It contains a memorandum containing a lot of financial information about the company.

Trading shares on stock exchanges

Stock trading is the process of transferring ownership of a share (or other security) from one trading participant to another. There are primary placements of shares (brings funds to the company through the sale of part of the shares), secondary placement (changes owners). When trading, there are several types of transactions:

• “long position” – a simple purchase of a financial instrument for storage and with the expectation of a subsequent price increase,
• “short position” (shares are sold without payment at the current moment - on loan, and the trader expects to buy back cheap assets, after the sale of which he will return the funds not paid initially).

How to play on the stock exchange as a beginner?

To start trading on the stock exchange, a beginner will need to register at a dealing center. In order to choose your first dealing center, try to focus on leaders who are successfully working in this field. On the website of the dealing center you have chosen, you will need to open an account and top it up. You will also need a terminal for trading shares - this is a special program that is installed on a PC. After this you can start trading. In order to avoid mistakes in the first stages, try to start working on virtual accounts - this will allow you to understand how the entire exchange works as a whole. It will be easier for a beginner to play on the stock exchange if he uses the help of brokers.

Frequently asked questions (FAQ)

To contents

Question 1. How and where to start trading on the Moscow Exchange?

MICEX was founded back in 1992. In 2012, it merged with the RTS exchange. Trading on the Moscow Exchange is now available to Russians.

The MICEX took first positions in the Russian Federation in terms of the number of traders and trading volume. Today the Moscow Exchange is one of the 20 largest exchanges in the world.

Here the trader has the right to choose one of the trading instruments:

• mutual fund;
• Securities;
• Futures;
• Option;
• Precious metals;
• Currencies.

Transactions are carried out using trading terminals provided by brokers. They pay close attention to the security of customer information. Therefore, each operation is confirmed by an electronic key.

IT IS IMPORTANT TO KNOW! Even a beginner can start trading here, but only through an intermediary – a broker. All companies are published on the Moscow Exchange website.

After registering with a broker, follow several steps:

1. Select a tariff for working with a broker;
2. Conclude an agreement with an intermediary in the office or online;
3. Choose a convenient trading terminal;
4. Top up your account.

Be careful. Please remember that funds deposited into your account are not insured. Only the trader himself is responsible for his actions on the stock exchange, and in case of failure, no one will return anything to him.

Trading on the Moscow Exchange is just as dangerous as on any other. To begin with, it is recommended to undergo full training in stock trading or at least master the basics. Stock trading and learning go hand in hand if you want to succeed in this field.

Question 2. How can a beginner learn to trade shares on the stock exchange from scratch?

How can a beginner make money on the stock exchange? You will be able to become a successful trader, but only if you have the willpower, motivation and desire to grow, engage in self-development and improve your knowledge in this area. This is where quality learning materials become so important.

INTERESTING! A significant advantage of the exchange compared to alternative ways of earning money is its constant relevance. It will always be there, it will not be affected by crises, it will not fall apart under the pressure of ever more advanced technologies.

This “madness attraction” and gold mine rolled into one will work as long as the majority supports it. You can develop in this direction throughout your life. One of the best traders, Brain Reinkensmeyer, has compiled tips for beginners that will help them earn thousands of dollars in the future:

1. Open an account. Find a broker who can register you on the stock exchange and familiarize yourself with the terms of cooperation. Find out if it offers training materials for its clients. Most brokerage companies offer their clients to open a demo account and practice applying the acquired knowledge. A live demo account on the stock exchange is a great way to practice;
2. Read literature. Books are a budget-friendly way to get a decent education in any field. It’s cheaper than a lesson with a teacher, and you’ll get more, especially at the initial stage. You can return to reading the book at any time - and this is a plus;
3. Get acquainted with current publications. They will give you the right thoughts regarding trading. Up-to-date information will help you not to miss new directions in the development of the world economy and trends in chart movements;
4. Help from a mentor. Look for a real specialist. It is possible that on the second or third “handshake” there will be a person who can teach. Without the help of a mentor, few people have managed to reach the top of trading;
5. Imitate the greats, don't envy them. Try to follow their path - their experience will become one of the main sources of inspiration for you;
6. Don't neglect paid subscriptions. Knowing a professional’s opinion about the market is worth a lot. Study the signals. Why did the pro decide this way? Find arguments for and against, practice;
7. Watch the market. Get familiar with the platform offered by brokers and open a demo account. Regular monitoring of price movements already at the subconscious level will give you the basis for profitable decisions in the future;
8. Attend thematic seminars, webinars and lessons. Communication with like-minded and more experienced traders will give you an understanding of the market, exchange and trading. You will benefit from the experience of other traders without investment;
9. Start trading. Take the first step and don't be afraid of it. Take courage and open your first trade, and may it not bring you profit. At this stage of development, you will have to pay for the opportunity to learn, and not always only with your time;
10. Subscribe to newsletters.

How to choose an exchange for trading?

If you choose between Russian stock exchanges, you won't have many options here. The most popular Russian trading platform is the MICEX. She specializes in stock trading and novice traders focus their work on her. The principle of operation on the MICEX is distinguished by its simplicity: in the electronic system, both buyers and sellers of shares simply form the appropriate orders. The system independently finds orders that match supply and demand and automatically concludes transactions. Trading in shares and futures on the RTS index in Russia is also carried out by the FORTS exchange.

Best brokers

To make it easier for you to choose brokers, we list the leading ones who have proven themselves online:

• Forex Club . It is with this brokerage company that beginners most often start, a time-tested market participant who always gives back the funds earned by clients.
• Alpari. Actively transfers his knowledge to newcomers by investing in educational programs. It’s very convenient and pleasant when experienced traders share their secrets with you. Those who are able to share their skills can earn money by teaching at Alpari, so let’s face it, this platform is not suitable for everyone. However, Alpari has a wide selection of PAMM accounts, which is a plus for a beginner.
• Alfa-Forex . The advantages of this broker include a high level of customer support, extensive and high-quality analytics, and a low spread level. A suitable choice for beginners is a broker with an excellent reputation as a reliable partner.
• Finam . The maximum leverage here is small - 1:40. For comparison, on Alfa-Forex it is 1:200. And the minimum deposit is large - from 30 thousand, which is unacceptable for many beginners. However, Finam is licensed by the Central Bank of Russia! And this is a huge plus and a rarity in the current market. It is very profitable to make money on affiliate programs of this platform.
• InstaForex . A suitable choice for those who want to trade on the stock exchange themselves. The minimum deposit is unlimited, meaning you can start with the smallest amount. Beginners can also choose any leverage, for example, 1:1000. Let us remind you that the 1:1 ratio is only suitable for experienced players with a huge deposit. This site has 7 years of experience, a good choice.
• Adamant Finance . Here you can try different exchange strategies, choose accounts, for example, with a spread, with a commission. Minimum deposits are $1 for spread accounts, $125 and $250 for MarketPro and MarkerPrime.

We hope our rating will help you choose the ideal broker for you.

Stock market strategies

In fact, all strategies for playing on the stock exchange do not provide a 100% guarantee of successful trading. They serve only as a guide for traders, which helps them make transactions more profitably. The main problem with all trading strategies is that each trader still understands its essence differently. Accordingly, he will also make a decision independently.

The following strategies are common to all traders:

• Investment strategy
• Pattern strategy
• Following the trend
• News strategy
• Trend control strategy.

Statistics show that the strategy of following the trend on Russian trading platforms demonstrates the greatest positive results. Its essence is that the trader needs to have time to enter a position before the trend begins to lose it (at the formation stage or immediately after the trend has been created). Psychologically, this is quite difficult to do. However, it is most profitable to purchase shares during a period of rising prices in order to resell them at an even higher price.

Why trade Forex instead of stocks?

There are two ways to trade stocks with the best stockbrokers. You can buy or sell real shares from a stockbroker, or you can trade CFDs with CFD (contracts for difference) brokers based on the underlying shares. The latter option is typically offered by retail Forex and CFD brokers. Most Forex brokers solve the dilemma of packaging CFDs and trading shares by offering shares as CFDs.

If you don't have at least $10,000 to deposit, then it will probably make financial sense to trade shares using CFDs. However, the overall spread plus commission charged when trading Forex is much lower than an equivalent CFD trade on individual shares. For example, the spread for EUR/USD is about 0.02%. the value of the instrument, and the Glencore share spread is 0.23% of its value. This is a big difference in trading costs.

There is also the issue of overnight funding from non-Islamic Forex or CFD brokers. Typically the interest charged for holding a Forex currency pair overnight can be around 3% of the value of the position if it is held for one year. With share CFDs the interest charged is usually slightly higher. If you buy real shares, you won't pay interest overnight. CFD brokers often (but not always) pay dividends as if you owned the underlying shares directly.

There is no doubt that the costs of trading share CFDs with retail brokers are significantly higher than the costs associated with Forex trading. So, there are three main reasons why it may make sense to trade Forex instead of stocks. First, Forex tends to provide higher risk-adjusted returns for competent traders. Secondly, much higher leverage is available in Forex than in stock trading. Third, doing “real” stock trading requires more capital than Forex trading.

stock exchange shares

A stock exchange is a specific trading platform that acts as an intermediary in the securities market. The stock exchange is not only a center where information is traded. The exchange performs regulatory, indicative and, of course, intermediary functions. Securities containing shares of companies are distributed on the stock exchange. Trade deals here are concluded by brokers. Brokers do not act independently, but on behalf of investors, issuers (actually, those who issue securities) or various financial intermediaries who make money from the purchase and sale of shares. The rights to purchased securities belong not to the brokers themselves, but to their clients. The broker earns only commissions from profitable transactions.

Choosing an exchange strategy

Now let's talk about choosing an exchange strategy, which is very important for successful trading and making a profit:

Trading with the trend

What is a trend? This is the direction in which quotes are moving. The trend will reflect the expectations of most market participants. This is a logical strategy; if you go against the trend, the risk of losing increases! False signals should be rejected, and a trade should be opened if the channel border is broken, that is, the price has sharply gone up or down.

We advise you to use the analytics of leading traders and closely monitor trends, choosing the optimal moment to buy and sell assets.

Investments

Let us repeat again, because we covered this topic in detail in a series of our articles on investing. The most commonly used are PAMM accounts, which many large brokers offer to open. Do not believe if you are promised an income higher than 30%. This means that the trader takes a lot of risk and pursues an aggressive policy.

Investments should be understood not only as passive income, but also as transactions designed for a fairly long period - a month, six months, a year. Here you already need a fundamental approach to analyzing the market situation, experience, and the ability to make long-term forecasts.

Patterns

These are the figures that appear on the chart of changes in the value of assets. The figure will show whether the trend will continue or reverse sharply. A good strategy for beginners; you can easily determine entry and exit points from the market.

There are a lot of patterns, but the most popular are “Rectangle” and “Head and Shoulders”. In the first case, a transaction is opened as soon as the corridor formed by the chart is broken, in the second case, the sale occurs when the distance between the “head” and the “neck” level of the chart is reached.

It seems difficult, but with experience you will easily read charts and patterns by actively using them.

Counter trend

Some traders deliberately take risks by moving against the main trend. That is, they continue to open buy trades while the price is falling. And then they wait for the trend to reverse.

The risk is that the same trend may persist in the market for a long time, which will lead to a drawdown of the account.

Trading on the news

A very simple strategy, but you need to follow the news extremely carefully and be able to analyze them. For example, data has appeared that the price of oil has increased significantly. There is a high probability that the ruble exchange rate will also strengthen; it’s time to sell the dollar while it is expensive.

But news that is significant for the market does not appear very often, in addition, you can make a mistake in the forecast, so brokers advise combining this strategy with one of the ones presented above.

Note that it is the combination of several strategies that will reduce exchange risks and help increase your income level.

What is the stock market?

The stock market is also called the securities market (bonds, stocks, etc.). A market of this kind is part of the capital market. The securities trading market is not entirely owned by stock exchanges - some shares are bought and sold outside them.

The stock market is a rather abstract concept. It refers to a set of different mechanisms that allow trading in derivatives of various financial instruments, bonds and stocks. A stock exchange is a specific organization that provides a platform for trading, bringing together in one place sellers of securities and those who are interested in purchasing them.

What goods are sold on stock exchanges?

On stock exchanges, securities of various types are traded. However, most often it is stock trading that takes place here. It is for this reason that stock exchanges are commonly called stock exchanges. The purchased shares may allow their owner to receive dividends - a share of the net income of the company to which these shares were issued. Also, the shares will allow the owner to receive a certain percentage of the company’s material assets in the event that it is liquidated. Shares can be common or preferred. Preferred shares allow you to receive a fixed portion of the company's profit, which is usually higher than the dividend percentage. However, common shares provide the opportunity to both receive dividends and take part in the management of the company whose shares you own.

What are shares?

Stocks are shares of ownership in companies. Almost all countries have a large stock exchange that organizes and regulates trading in the shares of the largest and publicly traded companies. Shares of publicly traded companies must always be traded through centralized exchanges, so unlike Forex, volume data is always available. Trading on the major stock exchanges is usually highly liquid, although less liquid than on the major Forex currency pairs. Sometimes dramatic events affecting a particular company occur and liquidity may dry up or trading may even be suspended for a period of time. Deeper, smoother liquidity can usually be found when trading indexes based on a large number of stocks, such as the S&P 500 Index.

Although publicly traded stocks are highly regulated, short-term market manipulation is more common in stocks than in the Forex market (despite being illegal in the stock market) due to lower volumes and the number of key buyers and sellers. The share price will be largely influenced by the financial health and expected future earnings stream of an individual company, but can also be greatly influenced by broader economic conditions.

The world's largest stock exchanges: what the TOP 7 looks like

1. NYSE Euronext. The exchange was founded in 2007. Its capitalization amounts to more than 16 trillion US dollars. About three thousand of the world's leading companies sell their shares on this platform.
2. NASDAQ. This exchange was opened in February 1971. It is unique in that it independently monitors the liquidity of posted quotes and, accordingly, ensures high trading performance. This platform is also called the “high technology” exchange, since shares of Microsoft, Google, Intel and a number of other world-famous companies are traded here.
3. Tokyo Stock Exchange. In operation since 1878. At the moment, 4/5 of Japan's stock exchange turnover revolves here.
4. London Stock Exchange. Thomas Gresham. One of the oldest trading platforms in the world. It was founded in 1570. Only local shares are traded here.
5. Shanghai Stock Exchange. It is the largest stock trading platform in China. The exchange has its own SSE Composite index.
6. Hong Kong Stock Exchange. It has been operating since the mid-60s of the last century. One of the most popular trading platforms in China.

Toronto Stock Exchange. The Canadian exchange trades securities of thousands of companies registered around the world. The site has been operating since the mid-19th century.

Features of online exchanges

If earlier traders and stock exchange players had to gather in one building or trade over the telephone, now increasingly the game is played via the Internet. This is very convenient, you can do everything at home, keeping track of the latest news and stock market reports. Moreover, the Internet provides a large selection of financial instruments and trading platforms. A striking example is the MetaTrader 4/5 platform, presented by Forex.

There are some disadvantages to online stock trading - you cannot see real quotes and you may encounter fraudulent brokers. However, if you remember movies about business, fraudulent schemes can also be carried out by brokers working on real trading platforms.