[Introduction to Stocks] Learn how to make money through stocks from scratch in 5 minutes

For many people facing challenges such as stagnant wages and rising prices, working as a delivery person or running a social media business on the side has become an option to solve the problem of daily expenses. On the other hand, “stock investment” has gradually attracted the interest of newcomers to the stock market. For newcomers who have just entered the stock market, what important information do they need to know? What methods can they use to learn more in depth?

Why do stocks generate returns? How do they work?

When we buy a company’s stock, we become one of the company’s shareholders. If the company operates well and its profits grow, its stock price will rise accordingly, and as a shareholder, we can make a profit by selling the stock. In addition, some companies will pay dividends to shareholders, which is also a way of income.

Regarding how stocks work, the price movement of stocks is influenced by many factors. The factors that determine the rise and fall include the value of the company itself, the perception of the company’s value by investors, and market sentiment. Investors tend to invest in companies that are profitable and are willing to pay a higher price for the stocks of these companies. This also means that the stocks of these companies will receive better evaluations and demand in the market will be relatively higher.

The stock market is a complex system influenced by many factors. Investors need to constantly study and evaluate the company’s fundamentals, market trends and investment risks in order to make wise investment decisions. This includes analyzing the company’s financial statements, understanding the industry outlook, and evaluating the competitive environment. A deep understanding of these principles will help investors better grasp the operation of the stock market and obtain long-term and stable investment returns.

What new stock traders must know and what stock market terms they should know

When it comes to getting started with stocks, you must know these knowledge and terms!

• The market price of stocks is subject to many uncertain factors and is floating. Factors affecting the market price of stocks include the company’s profitability, the relationship between the supply and demand of market funds, and even insider trading or artificial speculation.
• Net worth is the book value of a stock, calculated by adding the company’s capital plus statutory reserves and capital reserves, plus accumulated earnings or less losses. The total net worth is then divided by the total number of shares issued to give the net worth per share.
• Gross profit margin is one of the indicators to measure the value of a company’s products. The calculation formula is (sales revenue – sales cost) / sales revenue. It reflects the added value created by the company.
• Transaction price refers to the stock price when the buyer and seller reach a transaction. When the prices of the buyer and seller are the same and are matched by computer, the transaction price will be formed.
• Circuit breaker mechanism refers to the suspension of trading when the price reaches a certain point (circuit breaker point) during stock market trading hours. This mechanism is similar to the fuse in electrical appliances, which aims to prevent systemic risks, give the market time to cool down, and avoid greater fluctuations caused by market sentiment panic.
• Technical Analysis Technical analysis is a method of using charts to study past financial market information in order to predict price trends and develop investment strategies.

How to choose an investment portfolio to achieve your investment goals?

For stock novices, choosing a suitable investment portfolio to achieve investment goals is an important issue. Here are four investment portfolio suggestions for beginners:

• Conservative Investment Portfolio If you are a more conservative investor, it is recommended that you invest in securities and stocks with lower risks to preserve capital in the most stable way and avoid taking excessive risks.
• If you are a cautious investor, it is recommended to achieve a certain amount of capital growth through long-term accumulation with lower risks. When choosing investment targets, carefully evaluate the risks and potential returns, and focus on long-term stable growth.
• Conservative investment portfolio A conservative investment portfolio seeks a balance between risk and return to achieve moderate capital growth. It selects some investment targets with growth potential but relatively controllable risks to achieve the goal of stable growth.
• Active portfolios are active investors who are willing to take greater risks and invest a higher proportion of risky assets in order to maximize investment returns and achieve capital growth. Such portfolios usually seek high growth potential, but also require closer market monitoring and risk management.

Please note that the above investment portfolio recommendations are for reference only and actual selections should be made based on individual risk tolerance, investment objectives and time planning.

How to manage risks and stay calm and patient in investing?

Whether you are a stock market novice or an expert, you should learn to manage risks and stay calm and patient in your investments. Here are five suggestions:

• Understand your investment style Investors need to first understand their investment style, including investment goals, risk tolerance, time frame, etc. If the risk tolerance is low, you should choose a stable or conservative investment portfolio instead of blindly pursuing a high-return, high-risk investment portfolio.
• Formulate a long-term strategy. The most important thing to avoid when investing in stocks is being impatient. It is important to formulate a long-term strategy before investing, including budget, risk management, and investment goals. Following your investment strategy, staying calm and patient can reduce the risk of irrational decisions due to emotional fluctuations.
• Establish an asset allocation plan When investing in stocks, new investors should avoid investing all their assets, but should make appropriate asset allocations based on their investment goals and risk tolerance. At the same time, investors should regularly check their asset allocations to confirm whether they still meet their investment goals and risk tolerance.
• Avoid speculation. The stock market is full of uncertainties. When many people see others buying a certain stock and follow suit, the risk is very high. Profits from speculation are usually short-lived and it is difficult to get a stable return in the long run. Therefore, investors should avoid blindly following the trend and invest based on their own research and analysis.
• Avoid overconfidence. The stock market is volatile. Many stock novices or experienced investors may be able to get good returns in the short term, which may cause them to overestimate their abilities and ignore stock risks. Investors should find an investment style that suits them and invest within the risk range they can bear. At the same time, stay humble and continue to learn and improve investment strategies.

The above suggestions can help investors better manage risks in their investments, stay calm and patient, and thus increase the success rate of their investments. However, everyone’s situation is different, so when making investment decisions, you should base them on your personal needs and goals. If you need more specific advice, it is recommended to consult a professional financial advisor.

Investors who are new to stocks must break these 3 myths

• It is not true that only professional investors can make profits in the stock market. In fact, whether you are a novice or an experienced investor, you can get a good return by using market analysis, risk management and investment knowledge and experience.
• It is also a misconception that the stock market always goes up. The stock market is cyclical, with periods of ups and downs. Investors should pay attention to market fluctuations and buy and sell at the right time.
• Stock prices are only affected by company performance. In fact, although company performance is one of the important factors affecting stock prices, stock prices are affected by many other factors, including political factors, market sentiment, economic environment, etc. Investors need to consider these factors comprehensively to make wise investment decisions.

Dispelling these myths can help beginners to establish correct investment concepts and invest in stocks in a scientific way. However, it should be noted that stock investment still has risks. Investors should formulate appropriate investment strategies according to their own circumstances and risk tolerance, and seek advice from professional financial advisors when necessary. In this way, beginners can continue to learn and grow, improve their investment skills, and gradually achieve the goal of financial freedom.

Conclusion

Stock investment requires time, energy and patience for in-depth research. As a stock novice, it is crucial to continue to learn and adjust investment strategies. By constantly improving investment skills, investors can become more familiar with the operation of the stock market and related factors. During the investment process, stay calm and patient. Long-term investment and holding are important success factors. At the same time, investors should continue to observe and manage their investment portfolios, pay attention to performance and changes in the market environment. And adjust investment strategies in a timely manner according to market conditions to respond to market changes.

In addition, investors should also set goals and plans based on their financial situation and risk tolerance. Investment strategies should vary from person to person, and should avoid pursuing overly aggressive returns while carefully assessing the balance between risk and reward.