Share trading is a rewarding business for people with great analytical skills and bright fortune. This is not a business that can be started all of a sudden. You need to closely observe the market and analyze the strategies applied in the trade before you invest your hard earned money. What is share trading all about? To put it in simple words, share trading is all about buying shares of different companies and reselling them for profit at a later time. First you need to understand what a share is and why the price of the share goes up and down?
Share can be defined as a unit of ownership of a company. Several big companies like Walmart, Disney, McDonald, Reliance, Tata etc, sell out shares to raise fund. The capital amount required to start a venture is divided into several units. Each of these units are called share. Anyone can buy any number of shares of any company available for trade in the share market. The price of the share goes up, when the company gains profit from its business. The price of the share goes down, when the company’s revenue goes down. In other words, price of the share fluctuates with the performance of the company.
How do you make profit in this business? For example: – During the end of 1996, the share value of Wal-Mart was around $23. Today, the share value of Wal-Mart is $ 84.23. People who bought these shares during 1996 could earn big profit by selling them now. The game is all about buying the shares when the price is low and selling them when the price goes high. You need to analyze the market and should be in a position to predict the price variation. If the price is expected to fall in the near future, you should sell out the share to avoid losses. In case the price is expected to go further up in the near future, you need to hold the shares to sell them at higher prices in the future.
In our later posts, we will give a few tips to succeed in share trading.