Conspiracy of stock speculators to buy shares. How to play stocks
“causes some kind of unpleasant aftertaste for most of us. This, apparently, has remained since the 90s, when the so-called resellers were especially active. Talented businessmen bought where it was cheaper and sold where it was more expensive. But who said that this is bad? Today, if not everyone, then very many earn this way. Almost every type of business is pure speculation. We take it cheaper - we sell it more expensive. The difference between buying and selling is what it is. So why not apply this scheme to the stock market? It works great and gives good profits. But more about everything.
How to make money on stocks?
Generally speaking, there are two ways to make money from stocks. First, build a good investment portfolio and receive dividends from profitable stocks. Secondly, sell your package of securities when their value increases, thus making money on the difference in rates. If you buy shares to receive future dividends, you. If you are doing this for subsequent resale - . Is it simple? Whatever the case. There is another definition. A speculator is someone who makes money on short-term transactions, that is, he sells and buys with great frequency. The investor is gaining for the future, in the hope of selling shares and making money in about a year or two.
Psychology of the speculator and investor
To fully understand the terms, we will provide a small analysis of what is happening in the minds of market participants. For example, how does a speculator think? “Company X’s quotes are rising. This means you need to buy shares of the company. We take it, hold it for several days, make a sufficient profit and close the position.” It is very rare for speculators to keep shares for up to a year - this is rather an exception. How does an investor work? He does not rush to the first stock that comes along that is rising in price. His task is to make a deep analysis of the situation and collect information. Once he has chosen an industry and a suitable one for investment, the purchase is made. In the short term, the investor is not interested in the stock price of the selected company. The future fate of the company as a whole, the ways of its development, growth, and increase in the volume of services are important to him. All this directly affects his future profits.
Speculation in stocks. Main advantages and disadvantages
The main advantage of speculating in stocks is that they often bring quick and serious profits. There is no need to spend a long time analyzing the market and studying the prospects of a particular company. The speculator acts quickly, almost intuitively. He “licks” only the cream, makes deals in shares, and goes home. He is not interested in how the company will develop in a year, two or ten years. He has already received his profit and that is enough. We must not forget that speculators are very important for markets - they add liquidity to them and give them a serious impetus for development and survival. A speculator is a risky person who is ready to give everything he has for profit. On the other hand, speculation in stocks does not have a very good effect on its stability. Frequent buying and selling without any logic introduces an imbalance into the market, which prevents “legitimate” investors from entering it normally. Speculators, through their actions, are able to independently “push” prices up or down. It is impossible not to note the huge risk of such “work”. Now you can earn thousands, and within an hour you can lose everything. Such is the fate of the speculator.
Who are they?
So what kind of speculators are they like today? They walk next to us, live next to us and even write articles. These are detraders and scalpers – the real “monsters” of the stock market. These are people who have something to respect. They are purposeful, disciplined, courageous and, moreover, courageous individuals. Aren't there a lot of odes of praise? - Not at all. As a rule, there are not so many smart speculators who are constantly in the “plus”. This is truly an achievement on par with holding any ministerial position in ordinary life. And I'm not kidding - this is true. Any operation of a speculator is a serious risk. Practice shows that the number of position traders is becoming smaller. Why do you think? It's too risky. It is much safer to conduct hundreds of trades per day. Here there is a higher probability of remaining in the “plus” at least a little. Believe me, the risk is well rewarded. During the day, stock fluctuations can reach 4-5%. If you manage to “catch” at least a tenth of such changes, you can have more than 100% profit per year (and this is the minimum). Intraday traders do not disdain such a service as. What does it mean? Detraders receive multiple loans almost free of charge. There is no interest charged for this, provided that the money is returned at the end of the day. This opportunity greatly increases your chances of increasing your profit level. Can an ordinary investor dream of this?!
A special role for scalpers
A special “caste” among speculators is. In fact, they manage to skim the “cream” from the market dozens or even hundreds of times per day. Of course, he makes a small profit from one trade (just a few pips), but in total it turns out to be an excellent profit. The “weapon” of such a trader is not a scalpel, as you might have assumed, but bare hands and a cold mind. The scalping operation takes no more than a few seconds. But this is enough to take yours and go home. Just imagine how much money you can get from hundreds of high-quality “scalps”?
How do they work?
The main task of a scalper is to carefully monitor the window, the so-called “glass”, where all orders for purchases and sales of shares are visible. monitors the level of supply and demand. As soon as the right moment comes, he makes the deal. If the scalper did everything correctly, he went in the expected direction and the profit began to “drip”. The result is a few pipos in your pocket. If you fail to guess the direction, then the deal has to be closed, leaving you without a profit or even at a loss. Nobody knows how deep the market can go, and you don’t really want to take too much risk. Traders who are used to day trading do not want to take risks. They believe that leaving a bet for several days is very dangerous. Indeed, there is no guarantee that market movements will not change overnight. So you can be left without a deposit at all. The difference between evening and morning quotes can vary by 5-7%. If you do not manage to close on time, the loss can reach 10%. A true detrader will never take uncontrollable risks.
Basic rules for speculating in stocks
Each scalper has his own system - this is normal. But there are some rules that are common to all participants in the “speculative” market. Let's talk about each of them:
- Firstly, try to make transactions only within one day. Open positions overnight are “death” for a deposit. Such a risk is unjustified even for a speculator;
- Secondly, Never think for a long time when making a decision - act relying solely on your experience and intuition. Naturally, we are not talking about opening positions at random. It assumes that you already know the market very well;
- Thirdly, Discipline must come first. If a plan is drawn up, act exclusively on it and do not step aside. You can analyze and reproach yourself for mistakes later;
- fourthly, When trading, try not to think about money, do not take profits and income too seriously. Otherwise it only gets in the way;
- fifthly, Keep in mind that short-term speculation in stocks with low liquidity is unprofitable;
- At sixth, Do not trade in stressful situations. If you lost, quarreled with loved ones, or just had a bad day, postpone trading. Typically, one trader’s operation lasts no more than 10-15 minutes. You can complete several dozen such operations in a day. But the number of open positions should not be the goal.
The main thing in this matter is trading efficiency. It is necessary to “manage” several stocks and choose the most promising option for purchase at a particular point in time. And here it is very important to complete the transaction on all shares in a timely manner.
What are the conclusions?
Do you think trading is very easy? - You're wrong. Short-term speculators experience incredible stress during the day (primarily psychological), because constant concentration is mandatory. But such people know how to cope with shocks, continuing to trade even after serious losses. Naturally, conclusions are drawn in such a situation, and mistakes are not repeated. Good luck.
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You can buy shares for different purposes. Someone plans to live off dividends, someone is forming their own “pension fund”, someone just wants to make money on the difference in exchange rates. The latter are more common. These are “players” who invest in shares for a certain period of time – from several minutes to several years. Both short-term and long-term stock transactions have a very obvious goal - to make a profit from the sale.
How do you speculate in stocks?
Perhaps only a professional gambler can be called a speculator. This is an investor who constantly buys and sells stocks, making trades every day. His capital “flows” from one stock to another, from stock to bonds, from securities to currency and vice versa. A competent speculator with large capital or leverage can earn millions from one transaction. But he risks the same capital. History knows many bankruptcies of large investors.
There are two ways to speculate on stocks:
playing on the appreciation of the exchange rate (buying cheaper, selling more expensive);
playing short (selling shares borrowed from a broker as “debt” at a higher price, and then buying them cheaper and paying off the “debt”).
Speculators are not very fond of blue chips - their prices hardly change. The higher the risk of securities, the higher the possible profit.
A few words about how speculators manipulate the stock market.
Only big players can manipulate (in the full sense of the word). They initiate massive purchases of shares, artificially inflating their prices, and then, at the peak of the price, they sell. Speculators can also dump a large stake, causing panic among other investors, and then, when the price bottoms out, buy shares cheaper. In any case, they play on mass psychology.
How can a novice investor “play” on the stock exchange?
Not to gamble is the only correct advice to a novice investor. Without knowing the market, a particular industry, without understanding all the principles and “rules” of the game on the stock market, you are at great risk. And this risk is not always justified.
However, if you want to join the ranks of investors and make a profit, you can neutralize this risk. We recommend:
do not invest in stocks, do not risk your house, apartment or car, do not take loans;
do not try to play by making short-term transactions: the best option is investments for 1-2 years;
do not play on falling exchange rates - this way you will not end up owing the broker if something goes wrong;
always try to figure out the situation yourself, taking into account the opinions of experts, but not trusting the forecasts unconditionally.
Understanding the pitfalls of stocks and not taking too much risk, sooner or later you will understand this new area for yourself, be able to make a profit and accumulate good capital. In the meantime, good luck!
There are four main types of securities in the Stock Market - bills, bonds, checks and shares. Bonds and bills are purchased mainly by those investors who do not like risks and prefer to receive small dividends. Shares have the greatest speculative power on the stock exchange. However, before you become a smart investor, you must understand what a stock is and how you can profit from buying or selling it.
A stock has several qualitative characteristics that you need to pay attention to: liquidity, price and volatility. If a stock is liquid, then you can easily sell or buy it at any time. As a rule, liquid shares are accompanied by a huge number of trades, that is, a lot of purchase and sale transactions are carried out on them over a certain period of time. The more liquidity a stock has, the more trading there is and the more active it is. Volatility refers to the amplitude of fluctuations in the price of a share.
Short-term speculators hunt specifically for the volatility of stocks. The price of a stock is influenced by a certain range of factors and rules. A share is a document according to which you own the property of a business. Thanks to it, you get the right to vote at a meeting of shareholders and you receive dividends from it. To calculate the value of a business or determine the true price per share, investors must perform fundamental analysis.
Those investors who work on the stock exchange for the long term, first of all, pay attention to the real price. If we are talking about speculators, then they only want to make a quick profit and do not care about the value of the stock in the long term. That is, their value in the near future is important to them. If a speculator knows that the value of a stock will constantly rise in the near future, then he will pay any price for it. And the speculator’s decision will not be influenced in any way by the fair price, which the proponents of fundamental analysis so carefully calculated. The fact is that speculative activity is in no way amenable to analysis and calculation. If the price of a stock is currently low, then the majority of traders are convinced that it will continue to fall in the future. Accordingly, the demand for such paper will be zero.
But if the situation is the opposite, then most investors believe that the price will constantly increase and a massive purchase of securities will begin on the stock exchange, thus increasing their demand and value. If you notice a significant drop in shares, then the majority of traders will try to float them, and this will provoke an acceleration in the fall in security prices. This process will continue until traders decide that the price will not fall further.
The crowd effect works in a similar way when there is a sharp increase in the value of securities on the stock exchange. Almost all traders succumb to the massive rush and begin to actively buy the necessary shares, which significantly increases the already high demand for them. But here it is worth noting one point. Often, such mass purchases are prerequisites for mass sales. In this simple way, traders are able to significantly change the price of shares from the one calculated by experts.
That is, the value of securities changes not based on calculations, but on the actions of the majority of traders. Such actions may be based on anything: rumors, price dynamics, and so on. It seems that everything can be predicted and calculated, but the value of a share can be much higher or lower than what is called fair. To summarize, it is safe to say that in order to receive income from stock speculation, you must follow three basic rules:
- you must correctly assess the liquidity of shares;
- you must know the dynamics of changes in share prices in the near future;
- try to predict the volatility of a security, which opens up excellent opportunities to make money from price fluctuations.
a situation in which a group of stock exchange speculators, purchasing a significant amount of securities on the stock exchange, has a significant impact on their market prices.
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