What is trading and how to make money on it | GK Pelliron

Since childhood, we know how the store operates. You take what you need and instead gave the money. This is an example of trading in our daily lives. Just usually we do not even think about it.
So it turns out that you already know something about trading. Let us now deal with the fact that such trading on the financial markets.

The fundamental basis

Trading is primarily the exchange of goods, ie, when one buys and the other sells. Trader's task - to buy goods cheaper and sell it more expensively. As we have seen trading is first of all an exchange. An example of trading in ordinary life is the exchange of money for goods and products. In the same way the financial markets work. The only difference is in the product. For example you can buy shares of any company (in other words to buy part of its property). To make a profit you need to wait until the stock price will rise and then sell them. The higher cost will rise the more you earn. It is trading!

Money for goods

Now let's look at what makes stocks go up? The answer is simple: change in supply and demand! The more people who want to buy the product the higher the demand and therefore the price.

Demand exist - price growth

When demand increases then the price is steadily increasing. If the seller sees that the goods are not enough for everyone then he can sell it more expensive. Consider a simple example. Throughout the market just ten apples left, but you want to buy just a couple pieces. If you are the only buyer the seller is unlikely to be trying to sell the apples at a price above the normal.

Now imagine that there are 15 buyers and everyone needs apples. To ensure that you obtain the desired product all willing to pay more. In this case the seller can increase the price because he knows that apples were less than buyers. At some point the price can be so high that no one will want to buy more apples. As soon as the seller sees this, it will start to sell goods a little cheaper again to interest buyers.

More Offer - price reduction

When growing offer the price is reduced. If several vendors exist, they begin to reduce the price to attract buyers. What if our market will have another dealer, who will offer more apples and thereby create competition. It is reasonable to assume that buyers attracted by the cheaper goods, so a new seller is reasonable to set a price lower than that of a competitor. To draw attention to the product the first seller have to reduce the price of apples. Otherwise he may lose customers. As a result of the goods is established so-called "market price". That is the price at which a buyer is willing to buy the goods and the seller is willing to sell it.

And how does it work in the financial market?

In financial markets, the law of supply and demand works in the same way. If any company is doing well and the shareholders receive higher dividends, more willing pto buy its shares people will be. As a result of the increased demand will increase the price per share.

What is online trading?

It's simple! Online trading - is trading on the Internet. For a long time to trade in the financial markets could only banks and financial institutions. In the age of high-speed Internet everyone has the opportunity to try itself in online trading. While we did not go into the details on-line trading remember one simple truth: you can trade all that costs money. Stocks and currencies, raw materials and goods - all this can be found on today's trading platforms. And the biggest of them without a doubt is the Forex market, the daily turnover which amounts to almost 4 trillion dollars.