The brokers cheer themselves as soon as they hear the sound of the closing bells in the stock exchanges. It is quite strange in the situations when the market is disturbed. On every situation one can make money by trading in the share market. Stockbrokers are appointed for selling and buying the stocks.  Brokerage houses turn over profits by earning commission on these trades. If you’ve traded a lot in a day then that’s good for them, but it’s not so good for you. The people who have made the most money on the stock market don’t give into day trading. They turn away from the speculative nature of it and pay their attention to investing, which is an entirely different thing. The Benjamin Graham school of investors, which includes the world’s richest man, Warren Buffet, invest according to three equal elements.

You must thoroughly analyze a company, and the soundness of its underlying businesses, before you buy its stock;

you must deliberately protect yourself against serious losses;

you must aspire to adequate, not extraordinary, performance. 

By wheeling and dealing with daily trades on the stock market, you’re never likely to earn much money. For a start, an unhealthy portion of your money will go straight to brokers in the form of fees, and on that you’ll have to pay a stamp duty tax. To make any money on a daily trade, you’ll then have to recoup good percentages in a 24-hour period. This is folly, because before you’ve even started, you’ll be hoping the ticker rises higher just to break even. You’ll be better off forgetting your stocks and shares account altogether, and just heading to a website like CMC and spread betting. After all, both are forms of gambling. According to such people, an investor calculates what a stock is worth, based on the value of its businesses. A speculator gambles that a stock will go up in price because somebody else will pay even more for it. It is also urged that you should only invest if you would be comfortable owning a stock even if you had no way of knowing its daily share price.

You should really think of the stock market as a giant casino, which has calibrated the short term odds against you so that the house (brokers) always prevails against those who try to beat it at its own speculative game. Investing, meanwhile, is a different thing altogether. It’s something where you cannot lose in the end, so long as you play to the rules that put the odds in your favour.  People who invest in the long term make money in the long term, while people who speculate make money for their brokers. It’s why trading houses downplay the virtues of investing and hype the glitz of trading. They win.



 



 



 



 

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Chris DeNorch is author of this article on cfd. Find more information about spread betting here.

Author: Roberto Rafael5 Total views: 70 Word Count: 478

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