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How to make money on the stock exchange


Hello! In this article we will discuss what a stock exchange is and how to make money on it.

Everyone who had ever heard of securities thought about how to make money from them. But already when studying the material I came across the fact that making money on the exchange is much more difficult than it seems. In this article I will try to analyze all the theoretical aspects of trading on the exchange, how much you can earn in the end and how to prepare for all the difficulties.

What is a stock exchange?

Let's start with the theoretical foundations:

Stock exchange - a legal entity that provides trading in exchange-traded assets.

This is not just some abstract place where trading is being conducted. This is a huge company that is responsible for:

  • Organization of bidding.
  • Money transfer.
  • Valuation of assets.
  • Legal conduct of transactions.
  • And for many other things.

Exchange assets may include:

  • Currency (currency exchange or Forex).
  • Securities (stock exchange).
  • Goods (commodity exchange).
  • Exchange-traded instruments (derivatives market).

Each individual asset has its own exchange. For example, the Moscow Interbank Currency Exchange (MICEX) specializes in stocks, bonds and currency.

At the state level, the exchange is responsible for the redistribution of resources. Those who have money invest in those who need it.

Since many people know what a stock exchange is, exclusively from old films and books, I hasten to disappoint you. This has long been no longer a room where everyone shouts the price, waved papers and try to interrupt each other’s bid. Trading on the exchange takes place on the Internet, through trading terminals provided by broker companies.

Briefly about exchange assets

Let's briefly figure out what is the difference between the main exchange assets for an ordinary person.

Currency (forex market) is the most liquid and risky asset. You can always sell it for the current price, but it is constantly changing. The most uncomfortable market for beginners. The price is constantly changing, analytics is quite complicated, and the profit that can be obtained by trading exclusively with your own funds is minimal.

The foreign exchange market is suitable for two categories of people: experienced players or those who really want to spend several years and 2+ thousand dollars to study and gain experience.

The price of a currency changes due to several factors. One of them is the domestic policy of the state. The better things are inside the country, the more stable the currency feels. Just look at one example with the American dollar:

When things are going well in the US, its course remains unchanged. But as soon as the crisis begins inside the country, the dollar exchange rate falls. The last clear case: the mortgage crisis in 2007. Despite the fact that everything spread to the rest of the world and in general, the exchange rates of many currencies weakened, the dollar was the weakest.

Factors that you can rely on when trading on the stock exchange are unemployment, the level of investment in the economy, capital outflows, the state of the banking sector and extraordinary events. Such events may include the choice of the president, unrest in the country, etc. In addition to domestic politics, there is a foreign one. It also determines the strength of the currency in the global market.

A vivid example. As soon as sanctions fell on our country, the ruble simply flew into the pipe, and its fall was stopped only by direct intervention of the Central Bank.

Shares - equity securities that guarantee the receipt of part of the company's profits and part of the property during its liquidation. This is the most interesting and profitable market, which is expanding every year. The more companies are created, the larger the market.

Make money on the stock exchange

You can include it in trading on the exchange yourself, but in this case you will have to invest a lot of time and money in this activity. After all, a trader without a broker will have to independently obtain a license in order to be admitted to trading, as well as to study the operation of the market. Without training in this sector of trade, an ordinary person has nothing to do. In addition, a substantial entry fee will be required to bid. For example, in the MICEX, such a contribution is three million rubles - the amount for an ordinary person is too large. Another necessary investment is the purchase of a licensed program for trading on the exchange. You understand, it is much easier to start working with a broker with a relatively small starting capital. Especially if you are new to the exchange.

How to make money on a stock exchange for a beginner

Today, a huge number of brokerage companies are successfully working on the Internet, with the help of which everyone can start making money on the stock exchange, having a small reserve of funds for investments. The broker will provide you with the necessary tools for trading on the exchange. A fairly high rating on the Russian Internet is given to such brokerage companies as Alfa Capital, Uralsib, Troika Dialog, VTB, Finam and others. They managed to establish themselves in the market as a reliable partner, for the most part customers trust them. A brokerage company will not only give you access to the exchange, but will also conduct preliminary training. After that, you will be able to independently use the tools provided by the programs for traders.

How much do they earn on the exchange

No professional broker will give you a definite answer to this question. Too many factors ultimately affect the earnings of the average trader. It’s not worth it to “drive” into an advertisement in which you are told that you will be able to get huge income in the first month of trading on the exchange. This is not true. There is no framework that really limits the trader's earnings. But this is in theory. In practice, everything is much more prosaic. On average, traders responsibly approaching trading on the exchange “raise” amounts that make up about 20% of the funds they invested in trading. Even very successful traders rarely reach 40%. Accordingly, earnings will depend on the size of your investment.

How to make money on the exchange via the Internet

It is far from immediately that a newcomer to the exchange market begins to enjoy trading (many until this moment unfold and leave this market). Both psychologically and emotionally it is necessary to be a fairly persistent and balanced person. In addition, you will have to master the technique of trading on the exchange, which not everyone can do. As a rule, out of 10 beginning traders, only 1-2 people fully master the trade and remain. In order to start earning, you need:

  • Master the whole theory of trading on the exchange, get acquainted with its specifics and features.
  • Learn to constantly control yourself, not to trade in an excited state, not to act under the control of emotions.
  • Gain impressive experience with various exchange platforms.

Stock exchange how to make money

The process of trading on the stock exchange is called trading. Its main task is to earn on various financial transactions with currencies, stocks of large companies, futures and more.

The stock market is quite multifaceted. Today it is represented by the stock, derivatives and currency exchanges. For example, the MICEX in Russia is a stock exchange that specializes in trading shares of companies. But RTS is a derivatives market, it works with options and futures. You must independently determine which exchange market you would like to gain a foothold in and where to trade. Choose those sites on which work seems to you the closest and most understandable. The success of your activity and, of course, your profit will depend on this.

How to make money on the stock exchange first money

Beginner traders are advised to take the least risky start in the form of working with stocks or futures. Over time, you will gain an understanding of the process of earning on these tools. With the first experience, it makes sense to try your hand at working with derivatives or switch to Forex. The main thing is a large amount of regular practice and tight financial discipline. Do not risk too much, minimize the amount of loss, minimize the number of losing trades and the first profit will not be long in coming.

Securities Market Trading Strategies

Absolutely every trading strategy is based either on maximizing profits or minimizing risks. Both of these factors are opposed to each other. The task of each investor is to choose a strategy for themselves with the optimal ratio of risk factors and profitability during stock trading. All strategies are divided into conservative and aggressive. However, there are moderately aggressive ones. Beginners are recommended to choose conservative (with a minimum level of risk) strategies so as not to drain the initial deposit in the first days of work on the exchange.

Market analysis

There are 2 types of analysis of financial markets.

Fundamental, it is also an economic analysis. It is used by market participants to work with long-term and medium-term investments. It involves working with macroeconomic indicators.

Technical analysis. It allows you to predict market movements using indicators and charts. It is used for medium-term investments, as well as for concluding contracts within one day.

Money Management. How to manage risks on the stock exchange?

  1. Trade only with your own funds. No loans.
  2. Do not invest all investment capital in one asset or one broker.
  3. Do not increase the transaction volume by an amount that exceeds the original volume by 10 times.
  4. Get away from big losses.
  5. The optimal loss for one trading day should not exceed 2% - 5% of the deposit amount. These figures should be used when using stop losses.
  6. Try to make the profit 3 times higher than the loss.
  7. Do not open a large number of transactions at the initial stage.

Initial conditions of work on the exchange

It all starts with a license. Take the starting course of basic skills of the trader will also not be superfluous.

The following is a payment of the entry fee. Some exchanges do not allow clients who have not transferred payment to bidding.

The next step is to purchase software. The operation of the exchange on the Internet is possible only with the help of serious licensed programs. Only large brokers are capable of supporting such software.

Choosing a brokerage company

There is no universal formula. Therefore, you have to shovel tons of information in order to choose the most suitable partner. Pay attention to the size of commissions, the level of software, the range of available services, and, of course, reviews on the Internet.

Many brokers have special, starting offers for beginners. Examine these service packages from several companies to evaluate the prospects for further cooperation.

Evaluate the recommendations of experienced traders, experience in the market, as well as the authority that the organization enjoys in professional circles.

How to make money on the stock exchange with a small starting capital

Today, there are almost no restrictions on the threshold for entering the market. Starting is allowed even with minimal amounts. Some brokers suggest starting with a deposit of 1,000 rubles. For earnings and success, the amount of start-up capital does not matter. The main task is to cover the purchase of a minimum lot and pay a commission to the broker. Of course, not all market operators offer such sparing conditions, but recently there are more and more options available.

Advice from You probably saw an advertisement that Warren Buffett by trading on the exchange earned a fortune, the size of which is now estimated at 42 billion US dollars. However, few people know that the return on capital invested by this trader on the exchange is about 30-32%. This is a reflection on how much the average person can earn from trading stocks ...

How to profit from speculation

Speculative trading - short-term transactions, speculators prefer to constantly be in the cache (English cash - cash, in exchange terminology - money). The “money – product – money” scheme works. Speculators can earn both on the growth of the asset, and on the fall.

Market arbitrage - the purchase of one asset while selling another. Instruments (assets) are selected with a high degree of correlation (interdependence). If the spread (the difference between the assets) diverges, transactions are made with the expectation of a convergence in the future.

How deal decisions are made

Traders (English trader - trader, on the stock exchange - trading participant) make decisions on operations based on analysis of market data (both current and historical).

Types of analysis:

The fundamental one provides for the analysis of economic factors taking into account future events (GDP indicators, decisions of the Central banks, employment data, on the cryptocurrency market - decisions about halving, adjustment of remuneration). Technical analysis (TA) is based on the study of past (historical) data and the search for patterns in price movement.

Three postulates of technical analysis:

  • the price takes into account everything
  • prices are trending
  • the story repeats itself.

Trend (Eng. Trend - trend) - directional price movement, at which there remains an increased likelihood (more than 50%) of the continuation of the past movement.

Types of sites

You can earn money on different exchanges and their sites (exchange offices formed by asset profiles). Most exchanges are international.

Types of exchanges:

  • stock markets - for transactions with securities, bonds, debt receipts,
  • currency:
  • commodity,
  • metal markets
  • services
  • derivatives markets - include transactions with derivatives (derivative financial instruments - futures, options),
  • FOREX-dealing centers (earnings on the difference in exchange rates),
  • cryptocurrency exchanges.

To understand whether it is really possible to make money on the exchange, just look at the stock prices of American companies over the past 250 years:

American indices over the past 100 years:

The graphs clearly show whether it is possible to earn and how to make money on the stock exchange: buy cheap, wait and sell expensive.

Online Trading Features

At a time when the Internet had not yet gained distribution, to complete transactions it was necessary either to be directly present at the auction, or to give orders by phone. Now all exchanges support the electronic format.

An electronic exchange is a platform for online trading, electronic trading is how to make money on a stock exchange for a beginner without leaving home.

Benefits of Online Trading:

  • the ability to conduct operations from anywhere in the world where there is Internet,
  • simplicity in the formation of orders (orders for the transaction) - you just need to specify the price, volume and click with the mouse,
  • high speed operations
  • the ability to trade simultaneously on several platforms,
  • prompt reporting of applications and transactions of other participants.

Numerous materials on the Internet tell you how to make money on an exchange on the Internet, but you should weigh the risks and choose the safest ways.

Best Exchange Income Options

The exchange provides an opportunity for everyone to earn money. Waystoak earn onelectronic exchange via the Internet:

  • self trading
  • trust management,
  • participation in partnership projects,
  • earnings on training.

The first two methods of trading on the exchange involve investing equity in financial assets. Without investments, you can earn money through affiliate programs (how to make money at the exchange for a beginner sitting at home) and training in trading (suitable for experienced traders).

Transfer of finance to trust

Trust management is a less risky type of activity compared to self-trading. Transactions are carried out by an experienced financial manager, all decisions are made only by a specialist. The task of the investor is reduced to choosing a manager, the main criterion is a track record with a history of transactions.

Recommendations on how to choose a manager:

  • duration of work - from 1 year (preferably 2–5 years),
  • lack of losing quarters (better months),
  • availability of the manager’s own funds in the fund,
  • the presence of large investors.

The resulting equity chart (Eng. Equity - capital, in trading - capitalization of the balance sheet, the result of transactions) will help predict future income. The disadvantages of the method: additional commissions, the risk of loss when market conditions change (for example, under the influence of external events - war, cataclysm).

Partnership programs

Exchanges, brokers, dealing centers are interested in attracting new customers. All exchange-oriented projects pay generous referrals. To become a partner, just register and get a referral link. By placing a link on different resources, you can receive rewards for replenishing the project with new participants. Размер вознаграждения компании устанавливают в индивидуальном порядке, особенно высокие реферальные в проектах рынка Форекс, бинарных опционов.

Выбор торговой стратегии

Распространенные среди трейдеров торговые стратегии:

  • «купи и держи» (инвестиционная),
  • по тренду,
  • по графическим паттернам,
  • поиск разворотов (контртрендовая),
  • на новостях.

The choice of strategy is made taking into account the characteristics of assets, for example, investment strategies are more suitable for the stock market.

Trend Trading

The popular buy-and-hold trading strategy has become obsolete with the advent of computers. The assumption of Louis Bachelier (French mathematician of the early twentieth century) about the random wandering of prices was refuted by a number of scientists of the 60s - Benoit Mondelbrot proved the persistence of markets, and Edgar Peters gave a quantitative method (RS-analysis method) for measuring fractal lengths.

The essence of the conclusions is that the fluctuations in the prices of exchange-traded assets do not correspond to the Brownian (random) walk, but rather resemble the movement of particles in a viscous medium. With this approach, the future price movement can be predicted from past data, that is, the price has a memory, and the process itself is determined.

A trend (Eng. Trend - trend) is a directional movement, in which there remains an increased likelihood of continued movement. The basis of trending strategies is the determination of a trend and the conclusion of transactions in its direction.

How to make deals according to the trend, procedure:

  1. Identify the presence of a trend.
  2. Determine the direction.
  3. Select an entry point.
  4. Calculate risk, profit potential and volume.
  5. Make a deal.

To determine the trend, make graphical constructions or apply technical indicators, the simplest MA (Moving Average) - moving averages.

How to choose the right entry points - use kickbacks of price movements.

Investment use

The investment approach (“buy and hold”) provides for long-term investments in anticipation of asset growth. Should be considered:

  • degree of risk (the most reliable assets are bonds, trading stocks is more risky, derivatives and currency are instruments with increased risk),
  • growth prospects (fundamental data for growth, such as seasonality),
  • horizon and investment objectives (the period after which it is planned to take profits),
  • unscheduled scenarios (rapid growth, rapid decline).

To reduce the impact of risk factors, investors use a portfolio approach, combining multiple assets in one portfolio to diversify.

Trading with patterns

The use of patterns (graphical analysis) is a variation of TA. The essence of the strategy is to search for the visual similarity of price movements with basic graphic shapes.

Distinguish between models:

U-Turn Patterns:

  • double, triple top,
  • head and shoulders,
  • V-shaped top
  • saucer.

Continuation figures:

The figures were presented in 1986 in the work of American analyst John Murphy, “Technical Analysis of Financial Markets”. In the future, the technique was tested in different markets and recognized by the trading community. A significant drawback of graphical analysis is increased subjectivity, when people perceive visual information differently.

Pattern Patterns

The following are patterns of patterns.

Double Peak Pattern:

The Price Action Head and Shoulders Pattern:

Forex Spike:

Rounded top (Saucer):

Triangle Pattern:

Flag Pattern:

Pennant Pattern:

Descending Wedge Pattern:

Rising Wedge pattern on an uptrend:

Counter trend trading

The counter-trending strategy is to find pivot points and enter against the trend, with a forecast of the formation of the reverse trend. The most difficult way to successfully trade against the trend is to have sufficient experience. Of all the losers in the market, 90% of users who made deals against the trend in an attempt to "catch the bottom."

How to make counter-trend transactions, methodology:

  1. Identify the current trend.
  2. Wait for the fracture point.
  3. Find signs of a new trend.
  4. Log in to a new trend.

To determine the point of a break, a channel is used (the corridor in which the price moves) - a fracture is a place where the price breaks out of the channel.

Losses in the counter-trend transaction are limited by the lower price level of the channel, the profit potential is chosen by 30-50% of the previous movement.

Trading on the news

How to trade on the news - external events can significantly affect financial markets, and the market always reacts to the news. “Buy rumors, sell facts” - the principle of news trading, and who and when said this phrase is unknown. The point is that rumors (expectations), as a rule, do not correspond to future facts.

News trading has 3 phases:

  • before the news,
  • exit period
  • after the news release.

Which phase to enter the market depends on the specific methodology. A popular way is to use the post-news phase. The bottom line is to join the beginning movement with the calculation of its continuation. "Explosive" volatility increases the likelihood of "catching" the desired movement.

The most significant events for news trading are the news of the American economy.

Five key news from the US economy:

  1. NFP (non-farm employment indicator).
  2. FOMC solutions.
  3. Trade balance.
  4. Consumer price index.
  5. Retail sales.

Important news of world economies:

  • meetings of central banks,
  • interest rate decisions
  • inflation estimates
  • GDP indicators.

You can track events in news portals as well as in information and analytical blogs - the “Economic Calendar” section.

Step-by-step recommendations for beginners

How to start trading on the exchange, step by step instructions:

  1. Pick up an exchange.
  2. Choose a broker.
  3. Register an account.
  4. Install a terminal.
  5. Start trading on a demo account.
  6. Open a live account.

The choice of site depends on the specifics of the assets. If these are company stocks, stock exchanges (for example, the MOEX stock section) are considered, if cryptocurrencies are cryptocurrency exchanges (for example, Binance).

In Russia, the Moscow Exchange (MOEX) merged the various exchanges into branches. MOEX investors can trade bonds, stocks, derivatives and currency.

The largest American exchanges:

  • New York Stock Exchange (NYSE),
  • National Association of Securities Dealers (NASDAQ),
  • American Stock Exchange (AMEX),
  • Chicago Stock Exchange (CME).

The largest world exchanges:

  • NYSE
  • Tokyo Stock Exchange (NIKKEI and TOPIX Indices),
  • London Stock Exchange (LSE),
  • Shanghai stock exchange.

Popular cryptocurrency exchanges:

How to choose a site: on the site familiarize yourself with the tools for trading and terms (commissions, terms of contracts)

Choosing a broker

A broker is a company that, acting as a professional bidder, provides access to the exchange infrastructure. In fact, the broker is an intermediary between the exchange and the client. Access to stock exchanges is possible only through a broker (or as a professional participant after receiving accreditation).

Recommendations on how to choose a broker, which should be considered:

  • valid license
  • reliability rating (A to AAA),
  • the ability to open an account online,
  • service fees
  • availability of margin lending,
  • trading platform options,
  • demo account opportunity
  • access to global markets.

With cryptocurrency exchanges, everything is easier - an individual can become a participant, a broker is not required. The account and personal account are provided by the exchange.

Registration of a personal account

Registration of a personal account does not differ from the procedure in social networks, only the data must be reliable (usually require a phone and email). After registration, the consultant calls and talks in detail about the possibilities and working conditions. The employee can also clarify information about current bonus offers.

Terminal installation

A terminal is a client program that provides market information and carries out transactions.

Each terminal has its own specifics (QUIK - a universal platform, QScalp - for scalpers, WolFix - analysis of horizontal volumes) and individual conditions of use (most products are paid).

Popular terminals for exchange trading:

If a paid terminal is selected, it is better to buy a tariff from a broker - the expense will be fixed and deducted from the tax base.

Training trade

Most brokers offer to open a demo account with simulated real trading. This is a great opportunity to get acquainted with the platform and try your hand at trading. The main task of the training is to bring conditions as close as possible to real ones, so it is important that the amount of the demo account matches the really planned money.

Recommended training trading period is 1 month. With positive results (profit of 7-10% or more), you can proceed to real trading. If there is a loss on the demo account, most likely the trader does not have enough experience and knowledge.

Registration of a real account

To register a real account, you need to fill out a questionnaire with personal data and send scans of documents. The broker can request the originals of the signed documents, they will need to be sent by mail. Brokerage account - a special account that does not have a main currency and can be replenished in different ways in different currencies. When depositing / withdrawing funds, it is important to consider the commission.

If the broker is a resident of the Russian Federation, at the same time it is also a tax agent for citizens of the Russian Federation (with the withdrawal of funds from profit it will be withheld from personal income tax).

Increase in trading capital

Many brokers (in particular, forex brokers) offer a marginal option for trading - providing a loan against the security of funds in the account. The ratio of credit to own funds is called leverage (eng. Leverage). For example, if the leverage is 1:50, the broker allows you to make transactions with the volumes available when you increase the trading capital by 50 times.

The disadvantages of margin trading include a high degree of risk - for beginners it is better not to use leverage greater than 1 in 10: if incorrectly calculated, one losing trade can destroy the deposit. It is important to check with the broker the size of the minimum balance of funds at which the forced closing of positions (Margin Call) occurs.

On cryptocurrency exchanges, the project or partners provide leverage (for example, BitMEX allows you to trade with a leverage of 1: 100).

Management of risks

Risk management or risk management is to limit losses in case of adverse outcomes. A systematic approach should provide for a number of limits, exceeding which the process is suspended until additional decisions are made.

Types of risk management limits:

  • risk per trade
  • daily limit
  • weekly limit
  • monthly limit.

The risk of a deal limits losses with the forced closure of a position, trading resumes as soon as possible, with new entry signals. If the daily, weekly or monthly limit is exceeded, the process is suspended until the end of the corresponding interval.

How to use risk management, an example system:

  • risk per trade - 1%,
  • daily limit - 5%,
  • weekly - 10%,
  • monthly - 30%.

The risk per trade 1% is the recommended value for beginners. A monthly drawdown of 30% is the maximum allowable parameter with active money management.

Professional players reduce risks with the help of special tools - stock options, strategies for counter (arbitrage) diversification.

Earnings on the exchange with a small starting capital

Almost all projects provide the opportunity to trade with a small amount in the account. However, there are increased commissions. Profit from a small deposit will be small, and variable costs (payment for the terminal, in some cases - for connection) may make it impossible to receive income. It is worth considering the minimum amount for withdrawal of funds. When replenishing the account with a small amount after receiving a loss, the balance may become unavailable for withdrawal.

An effective way to make money on the exchange with a small starting capital is to use leverage. Losses will be limited by the size of the deposit, and you can get enough profit to cover expenses.

Secrets to profit without start-up capital

Is it possible to make money on the exchange without investments and how to do it? Newcomers often ask questions. In addition to referral programs, some exchanges offer to receive a no deposit bonus, with which you can start trading.

Projects conduct various contests with cash rewards and free participation. You can win the competition by registering several accounts and making multidirectional transactions on different accounts.