Stock exchange trading and Newton’s laws of motion

What new stock market investor should know?

We run a small stock market investment club and educate all new investors in our club with articles, software and stock market games. There is currently euphoria on the stock exchange and several people are investing money with sometimes highly ambitious returns.

In this article, we share with you some basic facts about stock market investing.

What is stock market?

Common stock is ownership in a company and is sometimes referred to as shares, securities, or equity. That means you’re entitled to a share of the company’s profits and all the voting rights attached to the stock. The most common way to buy stocks is to use either a full service or a discount broker.

Why do people invest in the stock market?

People invest in the stock market for the highest possible return throughout the life of the company.

What are the risks of investing in a stock market?

However, your initial investment is not guaranteed in the stock market. There is always a risk that the stock you invest in will fall in value and you could lose your entire investment. As a shareholder, you will not receive any money until creditors, bondholders and preferred shareholders are paid.

How can you interpret Newton’s Law to become a better stock trader?

Rule 1: “A stock that isn’t moving tends to remain still, and a trending stock tends to stay trending unless affected by an equal and opposite reaction or an unbalanced force.” .”

This means that you should always trade in the direction of a trend. You should look for a force that can come in the form of a drastic change in market sentiment or a drastic change in a particular company’s performance.

Rule 2: “A stock’s acceleration, as created by a market vote, is directly proportional to the magnitude of that consensus, in the same direction as the agreement, and inversely proportional to the mass of the stock.”

This rule teaches us that a stock moves up or down in a trend based on a force created by market consensus. The movement of stocks is determined by the stock price and the level of overall agreement in market sentiment.

The stock market is a zero-sum game. In the realm of stock market investing, we can interpret Newton’s Third Law as follows: “For every buyer there is a seller”. This is the 3rd law of stock market trading.

This means there may not be more buyers than sellers, however there may be very high or low demand for a particular stock.

Once you follow that Newton’s Law of Stock TradingYou will see how easy it is to invest in the stock market and make good profits regularly, regardless of bull or bear markets.