STOCK MARKET FOR DUMMIES 📈 How The Stock Market Works #Best Education Page #Online Earning

okay so today I want to talk to you guys

about basically a very simple

explanation of how the stock market

works now I'm going to be doing this

video a little bit different than my

usual videos I actually spent a long

time trying to figure out the best way

to convey this information and I've

started recording this with all my notes

written on the board and I just didn't

feel like it was coming across the right

way so I started over completely and I

basically drew like my pictorial

representation of this and I have my

notes on my paper here I'm going to read

off this for this video anyway what my

notes are and then with this diagram I

drew up here kind of show you where each

art fits in here um so the first part of

this basically is a stock or share a

stock is a piece of the company and when

a company needs to raise money issue

shares and when they issue shares for

the first time this is called an IPO or

an initial public public offering um so

that's basically this right here you

have your you have a company and then

when they do the initial public offering

they offer it to investors okay here's

the thing with this a lot of people

don't realize this but the company only

makes money one time from this with the

initial public offering or if they

continue they offer shares again down

the road um they will make money off

that but when the stock price changes

the company isn't making or losing money

they make money one time all for this

IPO or the initial offering of any

future shares so this is where the

company does the IPO or a new offering

of shares sells or to investors and they

make their money one time and they use

that money to conduct business on the

pricing during the IPO is determined by

two key factors number one being how

much the company is estimated to be

worth and number two is the number of

shares being issued um so what happens

here is after this after they sell to

the investors the stock will continue to

trade being bought and being sold on an

exchange an example of this would be the

New York Stock Exchange

um this is all based on the perceived

value of the stock that's why this is

kind of showing here the buying in the

selling of the stock all leads towards

this perceived value of what that piece

of that company is actually worth on

perceived value is the worth that a

product or service has in the mind of

the consumer perceived value of a

company changes over time that's why the

investor ah investors continue to trade

the stock if the perceived value of the

company pretty much stayed the same you

wouldn't see people buying or selling

the stock the price would stay

relatively the same and people who

invested in it would likely just hold on

to it but because the perceived value of

that company changes based on decisions

and anything else going on with that

company the stock continues to trade on

the stock market exchange on most

investors are looking to buy a stock

when the perceived value is lower and

sell it when it is higher on others

would be a Polish investor let me just

explain to you bullish versus bearish in

case you don't know what that means um

the way that this was explained to me is

the way that a bowl attacks with its

horns in an upward direction versus the

way a bear attacks with its claw in a

downward direction a bullish investor is

like attacking like a bowl weather where

they're doing their attack in an upward

motion where is a bear attacks downwards

that's why bullish investors are making

money from rising stock prices bearish

investors are making money from falling

stock prices so that's the difference

between those two there in case you

didn't know that on now a bearish

investor on the other hand they're going

to make money from falling stock prices

and they do this by short selling the

stock on this is where they're looking

to sell borrowed shares at a higher

price and then buy them back at a lower

price short selling is very confusing

I'm going to be honest with you I've

never short sold the stock and it's kind

of a more advanced trading strategy and

I kind of keep it simple guys I don't

really get into short sell in there but

it is something to note that not

everyone is making money from rising

stock prices some people make their

money when the stock price goes down

depending on the type of investor

or okay there are two types of analysis

that investors typically use when

they're buying a stock it's either

technical stock analysis or fundamental

stock analysis technical stock analysis

is all based on charts and numbers for

the most part and you're looking for

patterns and trends on fundamental stock

analysis is all based on company

strength so somebody who's doing

fundamental analysis of the stock we'd

be looking at like profit loss summaries

third quarterly earnings different

things like that coming from the company

they're looking at the overall strength

of the company and for the most part

they're good they're going to ignore

those day-to-day swings or the week to

week swings because they're usually

buying it for the long run

whereas with technical stock analysis

it's usually done by a swing trader who

is trying to swing trade based on the

moving up and moving down of the stock

based on the volatility so people doing

technical stock analysis are generally

holding the stock for a much shorter

period of time and fundamental analysis

is when you're doing a position trade

the best you're holding it for a long

duration of time so let me talk about

dividends a lot of people don't realize

what a dividend is mature companies that

are well established pay dividends to

shareholders on this is basically like a

little bonus saying hey thank you for

investing in us we want to encourage you

to hold on to our stock so we're going

to give you a little bit of money either

quarterly or yearly usually it's no more

than quarterly on so they're going to

give you a percentage every single year

or every single whatever the duration is

a percentage of whatever that stock

value is worth so however much you have

invested they'll kick you back a

percentage based on how much money

they're making that quarter or whatever

the factor is for the most part but you

generally only see a dividend with well

established companies so if a company

just had like an IPO and they're they're

new to the scene don't expect to have a

dividend they're usually the companies

that have been around for a lot longer

um something else to note is the share

price operates completely independently

of dividends so the share price may be

down but it may still pay a higher

dividend or the same dividend of paid

last quarter so share price doesn't

affect the amount of paying out in the

dividend arm some investors buy dividend

stocks only because they're looking to

seek regular stock market income just

this is another way that some people

trade I mean everybody has their own

strategy

some people strictly buy dividend stocks

because they only want to make money

from that whatever percentage is per

quarter or per year off those stocks and

that's all they're looking for okay so

because when you buy a stock you are

owning a piece of that company this is

going to give you voting rights so

that's what this line is right here this

dashed line that goes around the

investors um you own basically your

voting rights is all based on how many

shares you hold of the company or how

much of the company you own do you have

a right to vote in company decisions um

so voting rights as share is a piece of

a company and as as part owner you have

a vote and how it is wrong voting rights

are typically equal to the number of

shares your own unless the company has

issued different classes of shares um

sometimes you'll see this with a private

company that decides to eventually go

public they may offer people who work

for the company who own private shares

to have more voting rights than people

who are buying into it publicly and this

can be to basically maintain control the

company or make it so you can't so

easily buy control of the company on

classes of shares

it says shareholders have different

levels of voting rights and this can

make the company more difficult to take

over and help them maintain control like

I said it's typical of a private company

that goes public down the road so your

shareholders collectively vote on a

board of directors as well as major

company decisions on your board of

directors is a group of individuals

elected to establish corporate

management policies and make decisions

on major company issues and that's kind

of interesting people don't realize this

and I've gotten ballots in the mail

before you I think once a year you get

those when you go through and your vote

on the board of directors and a lot of

people don't take the time to do that

and you really should because you own

part of that company even if it's a

small fraction of a fraction of a

percent you are a part owner of that

company today and you're in whatever

decision you make

whatever your vote is does count towards

something so you own a little piece of

that company you should exercise your

right to vote in company decisions um

let's see here next I've talked about a

stock transaction so this is where this

would happen in this on the on the

exchange here you're going to have a

stock transaction with a transaction

there must be a buyer and a seller in

order to buy shares someone needs to

sell them to you so you can't

necessarily I mean for the most part

with a high high volume stock with a lot

of people trading a large cap stock

there's always going to be somebody

willing to buy and always going to be

somebody willing to sell if you were

trading a small cap stock you might run

into an issue where you're trying to

sell and there's nobody there to buy or

you're trying to buy and nobody's

selling right now but for the most part

if you're trading any stocks listed on

like the New York Stock Exchange or like

a nasdaq listed stock they're so

high-volume

there will always be buyers when you're

trying to sell and sell is when you're

trying to buy um so this is kind of

where I'm talking about this tug of war

I'm sorry right in the way here this is

the tug of war concept of the stock

market like I said the perceived value

of stock changes on a minute-to-minute

or day to day basis it's in a constant

tug of war of bearish and bullish

pressure we talked about before so

anytime you're seeing this type changed

direction it's kind of like picture the

tug of war versus the bear in the bowls

where one person is winning and one

person he's losing every spot that I

circled here on this is representing for

the most part indecision this is where

there's a tug of war and whenever you

see a stock going into an uptrend or

into a downtrend it means either there's

one the type of war or the Bulls won the

tug of war so where you can see a after

this indecision period here you see the

stock going to an uptrend this would be

more bullish pressure than bearish

pressure or more people are buying the

stock as opposed to selling the stock um

if you want to think of this in terms of

like psychology this would be greed on

the human emotion of greed here when the

stock is in an uptrend that means that

it's all based off the principles of

supply and demand so when there is a

high demand for the stock

there's not as much of a supply because

there's more people buying and selling

the stock the price will go up because

that's in more there's more demand for

that alright so then you see where it

will go into a period of indecision

again that's where buyers are not

willing to pay any more for the stock

and the sellers are going to kind of go

back into that tug-of-war or the Bears

versus the Bulls here and then in this

case here where the stock goes into a

downtrend that's where there's more

bearish pressure or more selling

pressure than there is buying pressure

at this point the emotion in this trend

here would be fear um

that's because people are afraid of

losing money they're selling the stock

because it's going down there's more

people selling than buying so the market

has that overwhelming supply and when

there's too much of something in the

market the price is going to go down so

any of these periods here where our

stock is basing or consolidating those

are periods of indecision and then up

trends and down trends it's all based on

that tug-of-war principle of whoever's

in control the market at that time so

that's pretty much how that works there

and this all happens during the stock

transactions here and that happens at

the stock market exchanged and something

else I want to mention here too in case

you didn't realize this just like

anything else there's hours to the stock

market I know the New York Stock

Exchange is open 9:30 a.m. to 4:00 p.m.

it's closed on holidays it's Monday

through Friday and they do have the

right to close the stock market if

there's something crazy going on so if

there was like a natural disaster or

something was happening where they

didn't want people to make quick

decisions and sell they can close the

stock market they have the right to do

that a lot of people don't realize that

um I just want to briefly mention on

volume so volume is basically how many

shares change hands each day high daily

volume is attractive because it's easier

to buy and sell and less and it's less

slippage at that point so let me explain

that to you when you're trading a

high-volume stock that makes it so for

the most part there's a buyer when

you're ready to sell and a seller when

you're looking to buy um slippage is a

difference between what somebody is

willing to pay for the stock and what

somebody

willing to sell the stock for that's

called basically the slippage is a buy

it is a bid and then there's an ask

price for the stock and the quote falls

somewhere in the middle on the higher

volume a stock trades at the less

different series between those prices

and then the lower volume of the stock

trades that there's a greater difference

between those prices so one of the

attractive things about creating a high

volume stock is you're going to have

less difference in the dollar amount or

what somebody's going to buy this dot

for and what somebody's willing to sell

it for so that's what's attractive about

trading a high cap or high volume stock

so when I'm saying hi cap that refers to

that refers to market capital or market

cap a market cap is basically the number

of outstanding shares times the price of

a single share of the stock I mean for

the most part like I said New York Stock

Exchange in Nasdaq traded stocks all

have a high market cap um that's pretty

much it guys that's like the basics on

how the stock market works I'm just

going to run through it one more time

this chart on top just cuz it's cool to

understand how this basically works so

when the company has the initial public

offering of the stocks they make one

time they make money one time off the

selling of those stocks to these

investors here um based on company

decisions the perceived value of that

stock changes over time and as such

there's more buying and selling pressure

at any given point in time if you

picture this as like a scale on one side

being buying one side being selling you

can see where they can tip the scale

more people buy on more people selling

and this will directly affect the share

price as you see down here that's where

the share price is in either a period of

indecision or an uptrend or downtrend um

as an investor you have the right to

vote on a board of directors and major

company decisions and as such those

decisions also affect the perceived

value of that stock and well-established

companies will pay off a dividend at

certain periods of time but that's

pretty much how the stock market works

and that's why shares of a stock

continue to trade people don't just hold

on to them forever so that's pretty much

all I got for this video I just wanted

to mention to it

but in my own personal stock market

trading strategy

I do have an e-book I've been working on

for the last three month that I just

finished up and I basically have been

studying the stock market for quite some

time now

and I've read dozens of different books

and guides and I've talked to different

people that have been trading for years

and what I did is I pulled all the best

information from those sources and I

packaged it up in this ebook which is

basically my own personal stock market

trading strategy my training is based on

technical stock analysis and I'm

generally doing a swing trade where I'm

holding the stock anywhere from a couple

days to maybe a week or two and then not

a long trade it's kind of a shorter

duration trade and I've actually had

pretty good luck with that consistently

they've been able to make a couple

hundred dollars a week with about one to

two hours of my time being spent looking

into stocks and doing the actual trading

itself so if you're interested in that

I'll link up to it in the description

but other than that if you guys have any

video ideas for me or anything you want

me to cover or anything you want me to

explain better drop me a comment below

and I will be sure to answer those but

thank you guys for watching

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