How to make a profit trading shares on the JSE and Financial Markets
The most common question asked about the stock exchange and trading shares is “Can you really make money?” – The simple answer is: YES you can.
You only need
- The right support
To make a profit trading shares you need quantified and up to date information. This allows you to make informed decisions and decreases risk.
From the desk of Willem de Klerk
But before we dig into the 7 things you HAVE to know before trading a share let’s first look at who this is NOT for.
Stock Market trading is NOT FOR YOU if -
- If you are afraid to lose money
- It is your last hope
- If you want to gamble
Success is not meant for everyone. If any of the above describes you, it is not for you.
Now, if you are still reading you're a person who -
- Wants to grow your wealth
- Wants to create your own retirement income
- Wants your money to work for you
- Can take managed and calculated risk
Now you can become part of the 2% that are creating their own wealth no matter your level of knowledge.
- Before you start we have to ensure you are a good fit for the business. For this reason, we have a personal meeting with you where we make sure of your current level of knowledge and expertise in the market.
- We custom develop your mentorship program to suit you.
- Your propriety software is installed and activated at no cost to you.
- You receive full one-on-one training from a broker on how to use and understand the software and data.
- You have access to weekly webinars where you will get the latest information and updates on the markets and market movements.
- The webinars are interactive and you have the opportunity to ask questions and have them answered live.
- You will start your trading on a demo account and only when you feel comfortable you change over to trading with your own capital.
Ons is al vanaf Maart by Generation Wealth.
En al wat ek aan enige iemand kan voorstel is om nie te lank te broei nie.
Ek het probeer om eers alles self te “analiseer” wat op die ou end net tyd gemors het.
Die eerste week wat ons maar ‘n klein bedraggie bele het van ons eie geld het ons 6% groei gehad.
Die 2e week het die bedrag wat ons ingesit het in 1 dag met 25% gegroei.
Die belangrike ding is om net die email (aanbeveelings, smse ens) te lees, te besluit wat jy wil koop, die oproep te maak en siedaar.
Wanneer jy koop word selfs gese wanneer jy moet uitklim en wanneer jy wins moet vat…1 2 3.
Ek sal die konsep ten eniger tyd vir enige iemand aan beveel. Dit is maklik eenvoudig.
Groete- Adri Nel
The 7 Things You Need to Know Before Buying or Selling Shares
Find out more on the company and understand what business it is in, how it operates and how it generates turnover and profit. Look in SENS, the media and the internet for opinion, deeper information and opinions on the company.
Find out who directs and manages the company, who owns or controls the company, if anyone has a major shareholding in the company, and what the company owns (e.g. Other companies, real estate, mining rights, licenses or brands).
Study the historical share price over at least the last 3 years and try to find reasons why it may have dipped or surged at any particular point.
Read and understand the company’s annual reports going back at least 3 years. Summarize the important financial data or use an online data service to give you the same information.
Pay particular attention to liabilities/debt, EPS (earnings per share), PE (Price Earnings) ratio, EY (Earnings Yield), DY (Dividend Yield), NAV (Net Asset Value), and the company’s dividend policy.
Compare the financial data of the company, and its share price performance, to those of its competitors listed in the same sector of the stock market.
Consider the views of stockbrokers and institutional investors relating to the company. These are sometimes consolidated into what are called ”consensus views” on future earnings, dividends and whether to buy, hold or sell the share.
What Are Stocks?
Buying stock (shares) is buying a part of the business. Once you have purchased the stock you own a part of the business where you bought the shares.
The stock amount you purchased represents your share of the ownership of the company. If the company had 1000 shares and you bought 10 shares you own 1% of the business.
There are small companies that have a few thousand shares and larger corporations with millions of shares and shareholders (or owners).
Why should anyone buy shares?
Buying shares in a business is similar to having your own business. You do it to make money and grow your wealth.
If you own 1% of Company ABC you own 1% of whatever the company earns. This means when Company ABC declares profits some of those profits are paid out as dividends to shareholders.
The dividends are calculated per share. The balance is put back into the business to do more work. Make more money, and more dividends.
This is normally a long term strategy.
Then there is a sort term strategy.
As the owner of 1% of the business you may sell your “business” to another person for a profit.
This is achieved by the share prices.
For instance, you bought 10 shares for R1000, that is R100 per share. Three months later the business is doing well and the share price went up to R125 per share. You then sell your shares for R1250 and you have made a profit of R250 on your investment of R1000.
That is a 25% profit in three months.
Why do share prices change?
At any time you may or may not agree with the particular price for a share. You might think it is too high or to low.
The reason is simple. What a particular share is worth is a matter of opinion. Supply, demand and availability play a huge role in the price of a share.
The price of a share is a collective expression of all the opinions of all the people who are either buying or selling the share.
When a lot of people conclude that a share price is high or overpriced they could decide to sell it. If there is a lot of selling taking place the price of the share might drop.
Or they might think it is a bargain price and start buying the shares. These combined orders can then cause the price to increase.
This is why you will see daily fluctuations in stock prices, some might be low as an eighth of a rand or the price might change several rand up or down in a short period of time.
Whenever there is a sharp price movement up or down it will likely pick up momentum and continue for a while. This happens because other buyers and sellers are attracted to the movement.
As an example, Company ABC shares suddenly rise from R25 to R27 per share. The online indicators that everyone is using will indicate this rise and attract buyers that might think it is still a good buy at R27 and they start buying shares. This buying will increase the price to say R29 per share. At that time the people who purchased for R25 might think it is a good idea to sell at R29 and they will make a profit of R4 per share. The selloff might then trigger a lowering of price back to R28.
What do shares cost?
The price of a share, like food, clothing and all other commodities depends on how many buyers are willing to pay for it, and how cheaply those who own them are willing to sell.
When a company first offers its stock to raise money there is no specific price on the shares. The price is not fixed by anyone. It is determined by a free and open bidding system.
This causes stock prices to rise and fall, sometimes very fast. Nobody ever knows for sure what is going to happen to the price of any share.
What are shares worth?
That completely depends on how much people are willing to pay for them. The price willing to be paid largely depends on one factor – Earnings. This includes the companies past record, it’s present earnings and what it might earn in the future.
As you see the value of a share is not just about the numbers, it is about the facts, knowledge and judgement.
You take everything into account, internal and external factors as well as competitors. Only then can you make an informed decision on buying or selling shares.
Today this information is available online and some searching around will allow you to find all the related information.
But that takes a lot of time and energy.
Fortunately, today there are some extremely good programmers in the world which have merged all the data into usable applications which we can access live on the internet.
All from the comfort of your own home.
When should you buy or sell shares?
This is often as important a decision as which stock to buy. The right timing is at the core of making good decisions and gaining or preventing large losses.
The trading of shares can be done in a few minutes up to a few years. You could realistically buy a share at a price and sell it for a profit a few minutes later. This could also mean trading in a few days or months.
Yes, you can lose as well, and frankly you will never be right with all trades. Some you will win and some you will lose but with the right knowledge you can lose 7 out of 10 trades and still make a healthy profit.
How to decide which stock to buy?
Overall this is a personal decision based on knowledge that you have. Each person is different and we all find a method that works for us.
That being said there are fundamentals which you will look at first, before making any decisions.
With the information at your fingertips you have the right information when you start out.
This is done with propriety software that analyses all of the relevant data and compares it to other factors.