How to speculate on the stock market?

Speculation on the stock market

Have you heard that the stock market can be swift and easy to earn, that you only need to buy company X because its course will soon increase? If you have something to do with investing then probably yes. It is not always that simple but possible!

At first I would like to correct a stereotype. Well, the word speculator now associates negatively, which is a mistake. The same mistake is to name all people who buy and sell securities to investors. Now it is necessary to clearly distinguish who is the speculator and who the investor.

An investor is a person who buys securities in the interest of building a long-term strategy that brings regular, fairly secure returns with limited risk. The speculator (and I emphasize that this is not a negative term) is a person who buys securities for sale after reaching a certain level of profit after certain anticipated events occur.

An example of speculation may be the purchase of shares in an oil exploration company when information is emerging that the company is close to finding or purchasing the resource. The investor would not buy such shares. Therefore, the speculator is exposed to high risk at the expense of large potential profits. The speculator usually invests in stocks and futures.

The art of speculation on the stock market

First, have patience and wait for a really good opportunity. It is not worth buying a better company. It is worth buying if its value is underestimated, this can be determined eg by means of a C / Z indicator. It is important to conduct a thorough and, most importantly, cool analysis of the situation.

Well, if the estimated increase in value is logically justified. An example may be the rise in grain prices during drought or the fall in winter prices. Speculation should be realized that there is a possibility of failure, do not believe that 100% of our predictions will work out.

Do not wait for the opportunity with your arms folded, you should actively seek opportunities in reports, information, services to invent and anticipate the opportunity before others and thereby increase potential profits by leveling up the risk (the cheaper you buy, the lower the potential loss).

Finally, the two most important advice. You must withdraw as soon as the situation develops against us. This is another rule that differentiates investment speculation. The second important thing is not to get emotional, only cool analysis. This distinguishes the stock market winners from the losers.