Stock market investments
This article is intended for people who are beginners in the subject of stock market investments. Over the last few years, I have collected a lot of thoughts on this issue and I would like to share them with people interested in this subject. I will try to keep this topic transparent - without unnecessary terminology and without discussing specific investment strategies. So let's start from the beginning of my capital investment on the stock market. A few years ago, I became interested in the subject of stock market investments in more detail. Initially, I obtained information from all independent sources and practiced the acquired knowledge on stock markets that did not require the player to have knowledge of the entire terminology applicable on the stock market. I think it was an appropriate move as overwhelming a beginner with knowledge can be quite embarrassing. This is also my advice to any beginner, as it is the best possible method.
My first investment platform was IQ Option. I spent many years of my stock exchange activity there. After some time of practice, I was 95% effective in the contracts I opened. I would like to emphasize the fact that in my opinion the stock exchange is not for everyone. Why? Many people make the same mistakes at first, and when reading something on the Internet, they try to apply it 1 to 1 in their investment activities. Unfortunately, that doesn't work. When investing your money, you need to think individually at every step, and the knowledge you have previously acquired is only to be a kind of reference in the decisions you make, so if you cannot make rational and thoughtful decisions yourself, I would rather advise you not to multiply your money in this way. You can then lose more than you gain. Let's assume, however, that you are a person who thinks individually in all your actions and you decide to play on the stock market. Are you wondering how it even works? I hasten to explain - if you are not unfamiliar with trading terminology, the stock exchange is nothing more than trading speculation only in a digital version on one of the selected stock exchange platforms. It works on the same principle as in reality - i.e. you buy cheap, sell more expensive and get the price difference.
On the stock exchange, however, you can buy and sell an instrument in the same way. In the terminology of the stock exchange, we call an instrument "goods" available for purchase or sale, i.e. raw materials, stocks of companies and companies, currency statements or cryptocurrencies. While the buying procedure is easy to understand, selling more than one beginner caused a headache. After all, how can we sell something that we don't even own? In this case, the rule I call "Reverse contract" is applied. It consists in nothing else than "declaring" to the broker that you want to sell the instrument at the current price in some time, which when opening your contract, and you will buy this instrument only when you realistically end it. Let's assume that something currently costs PLN 21 - you open a contract, then the price drops to PLN 18, and you close an investment position opened for sale. From a purely mathematical point of view, we are dealing here with a very similar, not very complicated equation, which was simply presented in the reverse order, which ultimately allows us to obtain a positive, expected financial result, while maintaining the correct transactional logic. So when you buy a given instrument, the price must increase, and when you sell it, its price must show a decrease.
When entering this business, it should be remembered that any knowledge gained can significantly help you in making your investment decisions, therefore you should not limit yourself to additional opportunities to qualify in terms of the applicable terminology or strategies that other players use. Thanks to these details, you will improve your approach to investment and gain an additional source of income. Moving on to the topic of strategies often recommended by other players, it must be remembered that they are based only on market repeatability. How to understand? They assume that if a situation on the market has occurred many times before, and then a favorable investment situation arises, then it will probably also happen in this case. However, it should be remembered that, in my opinion, such efficiency is approx. 85%, which means that there may be situations in which the behavior of the exchange rate and investors' moods will be completely different than forecasted. You have to bear in mind the fact that the movement of the price of a given instrument is influenced by many factors, such as current events in a given aspect, or people and their previously invested funds in a given instrument. If 20% of investors ended their contract at a given moment, then the price would record a clear downward trend, assuming, of course, that the rest of the investors would not perform any activities in relation to their contract.
On the stock exchange, it is also not forbidden to, for example, buy the same contract after some time, even though we have already opened our position on it. The rate is also influenced by the amount of money invested by players. It is obvious that the greater the investment capital, the greater the influence of the player on what is happening in the chart of the chosen instrument. While studying the knowledge of the elements influencing the exchange rate, I came across a rather interesting phrase: "The biggest players, such as central banks, have the greatest impact on the real exchange rate." After analyzing various stock market situations, I must admit that there is a lot of truth in this sentence. However, the situations that have occurred in recent years in the world and on the stock markets show that such large players may have methods, a good example of which can be the situation of GameStop Corp, which is an American seller of video games, consumer electronics and gaming gadgets. If you are a bit interested in business topics, it is very possible that you have heard about this "scandal". What was it all about? The above-mentioned company has had some of the worst financial results in its history in recent years. Many investors - the larger and more important ones, saw their opportunity by opening their contracts for shares of this company. A huge amount of money was put in motion, which was to be the last nail in the coffin of the aforementioned company.
These investors assumed that the company would definitely go bankrupt in the near future. To their bad luck, a lot of smaller investors on a platform called Reddit, colluded to carry out a special action against large investors, thanks to which they recorded large losses, but finally brokerage houses blocked the possibility of further purchases of shares of this company. As a result, it supported larger investors, while in the opposite situation, a smaller investor usually cannot count on this type of support. There were many threads in the GameStop scandal, but we would not have enough time to touch them all. This event perfectly demonstrates that smaller investors, by opening many positions with less capital, can also influence the price of a given instrument, but brokerage houses are more inclined to support larger players. Once you have made a decision to play on the stock market, it is best to think individually and create your own strategy entirely on your own. No matter how much investment capital you have, every move counts, as long as you can predict the moves of the biggest players. Here, I often use a technique that I call "Mirror reflection". In this technique, I try to think in the same way as larger investors, and only on this basis to implement my investment plan. At the very end of this article, I would like to share with you some information about the markets I mainly invest in. Due to the specification of my character and my profession, usually the instruments I choose come from the fields of technology and sports. It also happens that I invest my money in raw materials or currency statements. My choice of given instruments is motivated by the fact that I know the market of given industries and what cycles apply to them. The usual chart analysis, in investment terminology, is called "Technical Analysis", while the one resulting from the knowledge of the market and its current events is called "Fundamental Analysis". In my opinion, only a combination of these two techniques can ensure lucrative contracts. Knowledge of the cycles in a given industry significantly facilitates the investment matter, and when it is enriched with additional unique events - then our decision can be called fully thought-out. For a good visualization of the knowledge of market cycles, I will give an example of a raw material that is well known to all of us and necessary for life, i.e. coal. At what times does its demand increase, and when is supply generated? How does this affect the market situation of a given raw material? I leave these questions for personal reflection and more insightful considerations. By ending this article, I wanted to persuade you to think individually - regardless of whether it is a purely life or business situation. In my opinion, it is a key solution to many problems that occur on our way. If you are interested in exploring the subject of stock market investments, I encourage you to follow the news on the website, as in the following articles I will want to discuss more specialized and detailed issues related to the stock exchange.
