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Wanna Trade Shares?

March 19th, 2009 at 03:43 am

Share trading is when you buy and sell shares on the stock market. The whole idea of buying shares is to make money, but when you buy and sell you are charged a fee, so this will eat into your profit if you do it too much. Many investors simply buy the shares and keep them for several years. They can make money in two ways; by selling the shares after they have increased in value and/or by getting a dividend from the company they have invested in.

Ideally they would have invested in many more than one company. If an investor only buys shares in one company and it goes bust, then he has lost his entire investment. But if he has invested in a number of companies then he will lose only a part of his investment. Of course, the reverse is true too. If one of his investments does extremely well he won’t get as much out of it as if all his money had been with that one company.

Some investors who know a lot about Share trading - and many others who simply think they do - like to trade shares quickly. That is, they buy shares while they are at a low price, and then sell them once they start to rise. The trick is to pick the right time to sell. Shares can rise and fall at the drop of a hat. If you leave it too long to sell, they might tumble overnight and you will sell at a loss.

But if you sell too quickly the value may keep on rising and you have denied yourself the chance to make quite a bit more profit. This kind of share trading is quite risky. Very few people can accurately predict the market to the correct extent. They risk losing everything they’ve invested and maybe even more. Of course it is also possible to make a great deal of money too.

The best thing to do is think about what sort of risk you are comfortable with and how much money you can afford to lose. This may depend on a number of factors. A person who is quite young will have time to recover his losses in share trading, while an older person may not have that amount of time to spare.

Or you might be lucky enough to have a large disposable income, so you are comfortable with a large risk. You may know quite a bit about investing and so are more likely to make the right decisions at the right time. It really depends on the individual.

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