What is the Stock Market?
The stock market is a dynamic and complex global trading system that allows investor to buy and sell shares in publicly traded companies. Making money trading on the stock market means investing in the right companies at the right time, buying shares at a lower price and ultimately selling them at a higher price at a later time. The perceived value of any business can rise or fall over time, which for the investor will mean a profit or a loss accordingly. Unless the company the trader invests in goes bankrupt, it is largely impossible to lose the entire amount invested in any given company.
The global stock market is built entirely around the conflicting opinions of traders and investors all over the world. For shares in any given company to be sold, there needs to be a trader who believes their value will rise over time. On the flipside, the seller must believe that their value will decrease over time. As there can only be one of the two outcomes, every trade will result in one investor winning and one investor losing out. There are no instances in which both the seller and the buyer will both profit as a result of the trade.
What Makes Stock Prices Rise and Fall?
There are multiple factors that can affect the value of shares in any given company. From public opinion to reports in the media to the opinions of investors to supply and demand to the current performance of the brand profit-wise, these and other influential factors contribute to the constant state of flux that spans the entire stock market. When there is more demand among traders to buy a certain stock than to sell it, the price of the stock will usually rise. In reverse, a sudden or ongoing flurry of selling will usually lead to the price of the stock falling.
Why is the Stock Market So Difficult to Predict?
As already touched upon, the stock market is so difficult to predict because it is affected and influenced by so many different things. Influential factors can work both in conjunction with and against one another, making it difficult to know when and where movement in either direction is likely. Successful trading means keeping a meticulously close eye on every possible present and future influence that may have an impact on the stocks of your choosing, in order to make the right moves at the right time. It also means 24/7 portfolio management, in order to ensure action is taken at the very instant it is required.