5 Important points every new investor must know ?

Posted by sanvi nair on January 28th, 2017

What exactly is a stock market ?

Stock market is a online business where people buy and sell shares of public companies. One person sell and other person buy the same share. This way a huge buy sell market is created where shares are traded. One can know the investment which they put in share market but the earning is never known. If you invest then the profit can grow or you loose the investment but the whole capital is not doomed either you will have few percent of profit or few percent of loss, until you invest into a worst company shares. Their are many markets as well in which people prefer to invest, if we talk about commodities experts prefer to take MCX tips  from contributers as it is a highly volatile market. So, share market is a platform where people use their expertize, their knowledge to earn money from shares, this profit is gained only where some other person at other place face few loss. This where the money just flows from one person to other in the form of profits and loss.

How do people earn through stocks ?

Many investors at the same time invest in the market putting their expertize to earn profits. It is hard to beat others expertize to earn as above discussed the money just flows from one to other. The money you lose will become profit to some other. This way stock market can be proved as a adversarial market. As, all cannot gain profit or loss. So, it better to understand the market and all the conditions that will affect the stocks. So, that even in worst condition you will be able to manage to get out of the market with least loss.

How stock prices go up or down?

Many factors simultaneously affects the share prices this may include the position of companies. The demand of their product, their reputation, economic conditions, alternatives, expert poll, natural calamities, people investing in the company. All these affects the share prices. When all these factors favor the company share rise high in prices. And if any of the above fails to support the economic condition of the firm, then the impact can be clearly seen on company shares. Commodities is highly affected by the above factors, sometimes it become good to have MCX trading tips because of it's voaltile nature. Also when more people buy the shares the price rise whereas when more sell price automatically falls. All these factors must be known to understand the share will go up or down.

What makes stock market difficult to predict?

The main question that arise to every investor is when to enter the market. Many sit behind the chart to seek the right time to enter the market. It become really hurting when you sit for right time and the stocks begin to move higher. But stock market is not easy to predict, and that's why it's a complicated business. More probably people like to buy the share which are fairly valued. As if the shares are traded on higher value then their fair value the chances of fall are more. So, shares that trade on bottom line from their fair value will show some hike and the chance of profit grows. So, it become really important to know the fair value of the share to earn profit.

How to know shares fair value ?

One of the method to find the fair value is Dividend Discount Model in which the upcoming dividend per share divided by the required rate of return and he expected dividend growth rate.

Another is discounted cash flow method. Which can used by studying the business model of industry. By combining the growth and return on invested capital relative to its cost. This will give the fair value of share also their are many other methods that can be used to know the correct face value of a share. MCX commodity tips providers can even help to know the fair value of shares.