Explanation of the system of buying and selling shares with the aim of profit

Everyone is looking to invest in Buying and selling shares for profit In this post, we will provide you with all the information you need to have a comprehensive and broad idea about this type of investment. But before we get into the discussion, we must first define some terms.

Definition of the stock market

It is the stock market in which financial transactions are made on these securities, buying and selling, and it has legal rules regulating work and implementation mechanisms.

What do stocks mean?

Shares are a financial instrument that represents ownership of a specific share in a company and represents the right to obtain a part of the company with the same number and amount of the owner’s shares (upon liquidation) or its operating profits. Which clearly means that the shareholder owns a share of the company equal to the number of shares owned by him as a percentage of the total shares of the existing company.

Example :

For example, we have a company (X) and its shares are 10 million shares An individual or an institution owns one million shares of this company, which means that the ownership share is equal to 10%, which means that he has the right to the percentage of profit in the same percentage that he owns, and he must also bear the loss in the same percentage that he owns, and this is in the simplest form of the expression without going into many details.

Thus, each individual who has a part of these shares, less or more, is the owner of a part of the company or institution in the same proportion, even if the ownership is the lowest number, which is one share, and he can offer shares for sale at a specific price or at the offer and demand price offered in the stock market, as he wishes without any problem.

What is the working system of the stock market and buying and selling shares?

There is no doubt that every body or institution has a working mechanism and rules regulating this work, and it is governed by many restrictions and laws regulating so that The stock exchange operates for 5 working days from 9 am and lasts for approximately 5 hours, and it varies according to each country.

The importance of the stock market for individuals and society

The stock exchanges in all countries of the world are the mirror of the economy of each country, so the economic experts rely on them in activating the movement of liquidity and the economy, and it is undoubtedly affected by the economic environment in the country and political decisions, and it has many benefits for companies.

The importance of the stock market in developing the national economy is also considered by encouraging and directing savings to invest in securities, as the stock market encourages small and large savers who have a financial surplus that they cannot operate with projects due to lack of experience or lack of time in purchasing securities according to their money, and this helps to serving the purposes of the country.

The stock exchange contributes to supporting internal and external credit, as buying and selling currencies in the stock market is one of the manifestations of the country’s internal credit.

It also leads to achieving high efficiency in directing resources to the most profitable areas, which is accompanied by economic growth and prosperity.

How to invest and the mechanisms of buying and selling stocks?

The willing companies offer their shares on the stock exchange for public subscription, i.e. for those who want to buy them from the citizens at a specific price Then after the number is complete, it is left to the mechanisms of supply and demand and the market price according to the buyers’ desire. If the number of buyers is more than the number of sellers, then the price will increase due to the buyers’ desire to buy at the highest price. The seller wants to sell at the lowest price, so prices go down, and this is the law of supply and demand.

Example :

The shares of Company (R) were offered for public subscription at a price of EGP 10 per share. The offering was one million shares that were left to the mechanisms of supply and demand. It is a price law that is not interfered with and is according to the desire of the owner and the buyer.

Types of shareholders and traders in buying and selling shares

There are types of stock traders, some of whom buy for the purpose of temporary or instant profit so that once a satisfactory profit margin is achieved, he sells the shares and looks to buy new shares, and he is called a speculative trader.

Investor We are the trader investor who buys the stock for the purpose of profiting from the periodic profits and also benefits from the difference and the rise in the price over a certain period of time, perhaps a year or 5 years, depending on the investor’s conviction and the opportunities available to search for new shares in a growth stage with which the same new investment cycle can begin.

7- General advice buying and selling shares with the aim of profit

1- Before you think about buying, you must first determine the sector that you think is the best investment and suitable for your investment strategy, and then determine the best company in this sector.

2- Follow all the news related to the field of the company in which you intend to invest, and before that the news of the sector itself. Related economic news, follow-up prices of raw materials, iron, cement, etc., and so on, as an example.

3- Do not think about buying everything that is low, so you do not know whether it will decrease more or not, and let your judgment be on matters and the rules of organization for the purchase process in a more wise manner and technical rules that are not governed by feelings and emotions.

4- Trading in the short term can achieve profits, but that contains great risks and makes you vulnerable to more pressure, but if you follow the strategy of buying and keeping stocks, the profit in the long term may be greater, better, and with less effort.

5- Do not buy with all the available liquidity, but save from it with you, which will make you able to seize the good investment opportunities at the right time. The password is always the appropriate liquidity for the good opportunities, so be careful with this always.

6- Diversify investments, i.e. do not put all your eggs in one basket and follow the policy of diversification in different sectors after a conscious study and apply the risk factor, i.e. determining the ratios of risk and expected return to know which opportunities are better.

7 Do not be a prisoner of random advice or unknown rumors, but do an analysis of the company you want to invest in yourself and seek the help of God and science is better.

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