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What Are Stocks And How Does It Work

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What Are Stocks And How Does It Work

okay so welcome to the ultimate stock trading horse for beginners so who is this cost for well if you are someone who is totally new to the financial markets you want to learn more about stocks how it works then hey this cost is for you or maybe you’re a trader drive maybe you trade the Forex or crypto markets but if no idea you know what stock is about and you want to know dive in deeper than hey this course is for you as well or perhaps you’re someone who wants to use the stock markets to help you know generate a not a source of income to help you beat inflation or to just grow your wealth over time then hey this course is for you as well so before I get started my name is Rainer I am the founder of trading with Rainer calm and here’s what I want you to do right now hit that thumbs up button right and subscribe to my youtube channel the link is all below hit that thumbs up subscribe to my youtube channel and this way we never publish a new video you’ll always stay up to date never miss another training from me again sounds good then do it right now hit that thumbs up button and subscribe to my youtube channel the link is below so with that said right let’s begin so have a look at this right this is Apple okay so Apple okay so uh it’s a slight mistake over here I saw a time when I did this slides right Apple was whoof 731 billion but as of today it is a slightly higher you know in the stock market it goes up and down so this one is a little bit dated but it’s there about seven hundred plus billion market capitalization right this stock so Apple what does it mean to buy a share of Apple after all you want to learn stock trading where you can buy shares what does it mean to buy a share so when you buy a share of a company where is it Apple Facebook Amazon whatever it means that you’re a part owner of the company you might see something weird what I’m an owner yes you’re an owner but just a very small small minority owner so let me explain so you go down to this website over here right it’s Phineas thin beast calm a very useful website gives you a lot of financial data or stock prices and stuff like that and you see that right now Apple the market cap okay it’s a seven hundred and ninety three billion dollars that is the market capitalization of Apple the value of Apple okay almost 800 billion and right now the price is about hundred and sixty-five dollars so if you don’t buy one share of Apple all right you need to up one hundred and sixty-five dollars and you can see that you know earlier I mentioned that you know when you buy Apple Europe at owner of the company right and you can see that your ownership stick right let’s say you boy you buy one share of Apple right you 165 divided by this market cap which is seven hundred and ninety three point four six billion okay once you divide this right then you know how small your stick in Apple is okay does it make sense so hard 65 divided by seven hundred three billion dollars that is your stake in Apple if you can you can you know just imagine the kind of you know my newness right then okay let me just just a break it down to another way let’s say right let’s say somehow you’re a really rich individual right you buy a seven point nine three billion dollars worth of Apple stock in other words right right now you own 10% of Apple shares right just seven point nine three billion assuming you buy this much of Apple divided by 793 billion which is the market cap which is the total value of Apple you can’t write ten percent ownerships ownership stake in Apple so that’s what I mean right by when you buy a stock you’re a part owner of the company so you can check out this website fill this right a lot of financial data over here but for now let’s move on all right so let’s stop right you know that when you buy a stop stock right it’s an ownership in a company so a stock is traded on an exchange right an exchange like the New York Stock Exchange Singapore exchange a London Stock Exchange so depending on you know where you’re from right usually your own country would have an exchange right dedicated to trading stocks so one thing to note is that there are many types of stocks out there they don’t they have stocks that you know focus on energy stocks that are technology related and if you want to break it down right there are pretty much about 11 different sectors that you can look at when trading stocks okay so within this sectors you can further break up the different types of stocks but we will not go you know into too much details generally you need to understand that stocks they are traded across the different sectors and these are the eleven sectors that you know you might want to be aware of Energy Materials industrial consumer discretionary consumer staples healthcare financial information technology telecom utilities and real estate and this isn’t the only way right you kind of you know classify stocks because you can also break them down according to their market cap otherwise known as their market capitalization so you can rank stocks according to how much they are worth like for example Apple you saw earlier about 700 billion dollar company that’s a mega cap we call it a mega cap company latch cap is anything over ten billion dollars meat cap companies between two and ten billion dollars small cap is between three hundred and two billion dollars and micro cap is between fifty and two hundred million dollars and finally Nano capital nano cap right is below fifty million dollars and there’s another one right which I did not edit here it’s called a penny stock right so penny stock is a stock right as trading below $5 they are usually the the micro cap nano k or even sometimes even a small cap stocks so these are what we call a penny stocks right stocks that are really you know trading at a very low price point usually below five dollars okay so these are a different type of stocks right you can classify them as well according to market cap so now why do you want to trade stocks okay well there are many reasons why you want to treat stocks maybe because you want to beat inflation right generally from where I’m from Singapore inflation is about three or four percent a year so maybe by trading stocks I could like hey ten percent a year I’m beating inflation right I’m protecting and growing my money and growing my wealth okay also you can you know some people they do trade stocks to earn a living to earn a second income right by you know trading stocks on a shorter term timeframe right you know making anywhere from 2% 4% 5% a month they trade stops to earn a living so that is possible as well so there are many reasons why you wanna trade stocks and really right you have to ask yourself what is the purpose of this first and foremost right before you dive deeper because as you study later in the course you realize that there are different methods to trade stocks and different methods right have their own pros and cons to it but we’ll get to that later but first and foremost right ask yourself why are you trading stocks you know first and moving on right how to buy a stock so let’s mention write a stock is traded on eggs on a machine she’s not like Forex ways no it’s over-the-counter or forwards ways you in a broker trading within one another no when you trade stocks right when you buy stocks you go through an exchange and just let me illustrate know how it works let’s say you know this is a you all right okay you wanna buy stock right you go to your broker let’s call it B and your broker will then link to an exchange so you can see that whenever you you wanna buy a stock ghost your broker and your broker it wrap your order to the exchange and within a few seconds the exchange will a know whether your order is filled or not okay so once the order is confirmed exchange sends the message back to your broker and then instantaneously or rather a while later right you will notify you on your trading platform that hey you know your tray is fill so that’s how you buy a stock through a broker in a broker who then you know get your order to the exchange so you can see that there are many different different brokers around the world many different players right let’s call this B this is B and there are other players let’s call it P right other you know other people who trade or buy stocks okay so this gives here this little Emine man it expands can expend and it really really huge and that’s how you know the stock market works right they go to the broker you buy a share from the egg and then they brocco the broker routes the order to the exchange carrier confirmation exchange goes back to the broker and then goes back to D retail like you or me right so this is how you buy a stock by having a broker to execute your traits for you on the exchange of course there are there are times where certain people they have the privilege to just tirely get the order into the exchange right but most of you watching this video right now it’s unlikely that you know you will fall under the category that’s usually for institution right but hey that is possible as well so that’s how generally you buy a stock okay so let’s do a quick recap the more a stock represents an ownership in a company right number to stock is traded on an exchange rate depending where you’re from can be New York Stock Exchange Singapore Exchange and nowadays right with barriers breaking down right I’m from Singapore I can easily trade where stocks Philippine stocks or whatsoever it’s it’s not the because right now this you know the barrier to entry is very low number three we talked about the different types of stocks right by sectors right where there’s energy industrial and stuff like that or you can actually trade it or classify under the different market cap right meaning you know the size of the stocks how valuable they are there’s a market cap and finally right you buy stocks through a broker and then you will you know put your order to the exchange to let you know whether you know order get steel or not okay you

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