The stock market is a massive puzzle that is changing every day. Nobody knows everything about the stock market, however we have a few things for you that you may not know. Join us this week as we dive into 5 things you may not know about the stock market:
Money is Never Lost in the Market
For many who have seen their accounts become smaller and smaller over time, this one may be tough to believe. The truth is however, money never simply disappears on the stock market, it merely changes hands. Host Andrew Baxter points out that where there are buyers, there are sellers meaning there is always someone else on the opposite side of any trade you take. What is happening is merely a transfer of ownership between people who have different opinions on where the price is going to go where someone is wrong and someone is right. The majority tend to find themselves on the losing side with a small percentage of people occupying the winning side. When frustrated with the stock market, remember to stay focused and work towards winning.
How to Gain an Edge
Operating in the market is a tough game and over time blind luck is not a viable strategy to rely on. As a seasoned veteran in the trading space, Host Andrew Baxter has a few suggestions on how to become the one with the deck stacked in your favour. As with most things, what you often get out of the stock market depends on the work you put into it. The work before getting started, as well as your behaviours when you are active in markets will go a long way to determining what sort of trader or investor you might become. Becoming proficient in both technical and fundamental analysis with regular practice and repetition is vitally important for any investor and may be the difference between you making a profit and a loss.
Gaining an understanding for seasonal analysis can also give you an edge. Many associate weak markets with October, but the reality is that September is historically the weakest month for markets. Developing the understanding to firstly know things like that, and secondly the skills to be able to position yourself around is a way you can put yourself into a position to profit in a tricky market landscape. Seasonality and statistical analysis are essential factors to consider when constructing a successful portfolio.
The Stock Market is Old
If you look at the nature of the market today, you see photos of people looking at 6 different monitors with all sorts of indicators across their screens. This was not the case nearly 1,000 years ago when the stock market came into existence. Although it may seem a lot different, Andrew Baxter explains the basic premise remains – connecting buyers and sellers in a marketplace. No longer is there cause for concern when it comes to deals, because now everyone continues their pursuit of the same goal – no matter how swift ownership transfers.
The Size of the US Market
The stock market in the US is big, but do you know just how big? In fact, the US market occupies 55% of the global stock market. With countries breathing down the USA’s neck trying to become the largest in the world, Andrew Baxter points out that they maintain a sizeable advantage in terms of listed companies on their exchange. Their businesses are not just American but are truly global with major players in almost every area of the market you can think of.
Higher Risk Does Not Equal Higher Returns
An old wives’ tale is that in order to generate better returns in the stock market you must take on more risk. Host Andrew Baxter explains that this simply is not necessarily the case. Upskilling is a genuine means of lowering your risk as you become more competent with your trading and eliminate some element of risk in that sense. Likewise, learning key skills for your trading is also going to increase your chances of becoming a profitable trader.
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