Stock trading consists of buying and selling stock, which companies issue to raise capital. You can dabble in the stock market to pad your wallet for the weekend or invest more aggressively to change your lifestyle. Stock trading has some risks, but it can also offer many benefits when you research and analyze a company’s stock and select your investments wisely. You can start out slow and learn to trade actively to reap the positive effects and rewards of stock trading.
You can make unlimited amounts of money in a short period of time through stock trading. You don’t have to worry about limits on how much you can make or how much time you have to make it. People have made a fortune on the stock market by starting out investing small amounts in stocks. At the very least, you can have a nice stash of extra income now and then as you become more adept at buying and selling stocks. When you start buying the right companies, your probability of making great profits becomes higher.
Part Owner and No Hassles
When you buy a stock, you own part of the company because a share of stock represents a proportional share of ownership in that business. Better yet, you get to own part of the company with virtually no responsibility. As the company becomes more successful, the value of the share rises and you get to claim some of the glory, as well as the profits. Of course, the price of the stock can also fall because of company changes, but you’re taking a small risk and playing an integral part in the venture. That alone brings you positive effects from stock trading.
Good for the Long-Term
Although you might use stock trading to make fast profits, you can also count on stocks for long-term investing or retirement funds. The average large stock has returned close to 10 percent a year since the end of World War II, according to CNN Money, beating out inflation and better than returns from real estate, bonds and other savings investments. Investing in a variety of stocks from a range of industries helps lower your risk by providing you with plenty of investment options to make up for any stocks that perform poorly.
Stock trading also helps to challenge your mind. Instead of wasting your efforts betting on games, you can sharpen your skills at learning to buy stocks, even getting lessons from your mistakes. This self-education helps you to eventually find profitable stocks that continue to grow in value. Your profits grow as well and certain stocks begin to pay off with little effort. Stock trading becomes a bit of a game, but you earn more money as you become more knowledgeable about stocks, unlike betting on teams that let you down.
You have a wide variety of stocks to choose from as long as you have the sufficient capital to own the stock. Stocks easily convert into cash when you need it by selling stocks to other traders. You can reduce the amount of taxes from capital gains when you happen to have a poor-performing stock. Offset your gains from the losses of the stocks that drop in value.
Jerry Shaw writes for Spice Marketing and LinkBlaze Marketing. His articles have appeared in Gannett and American Media Inc. publications. He is the author of "The Complete Guide to Trust and Estate Management" from Atlantic Publishing.