Question

Write a one-page paper about the stock market. The good and bad side of it.

Answer 1

Stock market is a place where we can buy shares of the small or mid or large cap companies. Mainly there are two types of trading which are intraday trading and another is delivery positions. Intraday trading is defined as buying and selling is taken place in a single day whereas delivery is defined as holding the shares for more than one day and it can be for many years.

Normally, the beginners don't study about the stock market and blindly invest the capital into stock market and will lost money. So a detail study is to be done about the market and share prices. There are many indicators which helps to get profits. There are technical indicators which helps in day trading and fundemental analysis of companies which helps in long term investments.

Advantages.

In stock market, we can trade the equity, derivatives and commodity which will helps to give a huge return in a short period. If we study well and start investing, we will get a decent profits consistently. It also helps to study about the market conditions and market emotions. It helps to give more return than banks or other institutions give to us.

Disadvantages.

Without proper studying, whole capital can be lost in short time. If one person get loss in one trade, he will try to trade again and again to cover that loss which can increase his losses. So emotion control is lacking in many people. Without proper strategy, no one can achieve good profits.

SUMMARY:

The movement of share price is to be understand first. We need to analyse the trend of the market. Need to follow market trend and don't ever trade against the market trend. There are many indicators like pivot points, moving average, volume, stochastics etc which helps to analyse the stock price movements and entry point to take trade.

The main advantage is that financial freedom can achieve through stock market once we study and act accordingly. Huge returns will be awarded through stock market within short time. It also helps to increase the knowledge about the market and analyse the global economy.

The bad side is that there is high risk in many types of trades. So risk should be taken for this one.