What does Investing in the Stock Market really consist of?

At all times, more due to ignorance or bad luck, the world of the stock market has been dangerous and a place where losing money is almost certain.
Many people think of the stock market as a place where money is played and, for example, in a casino, you depend on chance to win or lose.
In the world of the stock market there are two completely different scenarios, those that have ever earned a lot of money and those that have lost even more than they should. Obviously, whether we talk about profits or losses, the stock market is not a game of chance.
With this we want you to be aware that investing is not a game, but it is not a method to lose money because then, how do more and more people decide to invest? Those who left less benefited from an investment will of course discourage you when it comes to investing and even they may not bet on the stock market again.
We are going to encourage you to at least understand the mechanism of investing in the stock market and observe for yourself whether or not it is worth investing.
The bag
To talk about the Stock Exchange, you must first begin by explaining what it is, so you should know that the stock exchange is a private organization that offers its members the possibility of generating benefits through purchase and sale orders and negotiations.

In stock markets, securities are traded based on known prices that are set in real time. It is a regularized market, where investors will enjoy a secure environment to carry out their transactions.

The Stock Exchange helps boost economic and financial development and this strengthens the capital market of the different countries of the world. In our case, that of Spain. In the Exchange we can highlight three main participants:

Companies, which can sell their shares to the public for financing.
Savers, who become investors who benefit from dividends.
The State, because through the Exchange they can also find financing and take care of public expenses, as well as carry out works of a social nature.
In the Stock Exchange they are negotiated with the purchase and sale of all types of securities, such as stocks, public and private bonds, participation securities and other types of investment instruments. Usually, there is a lot of trading with stocks, as there are very solid companies and many operators see an opportunity becoming shareholders.

Bubble pop dot com
Many of these people suffered in a very different way the bursting of the bubble of internet-linked companies better known as the dot com bubble.

Between 1997 and 2001, these types of companies rose like foam as it was a new market, the Internet. At the time the closures began and a smooth but long recession of this type of business. Some of those who lost investments possibly put aside the results that were giving small losses every day or were too confident when thinking that it was just a bad run.

Others at the time they were living decided to leave soon taking with them interesting benefits. Both used the same way when investing but the decisions they made during their investment obtained very different results.

Really, investments in the stock market can have many risks, but how you see the attitude of the investor can also do a lot, since in this case there are those who did not notice the losses until it was too late and others who instead managed to get out on time With some benefits.

How the stock market works
When a company decides to sell shares in the stock market we must understand this as a need for capital to be financed but without resorting to expensive loans from a bank where they should pay interest in a short period of time. A company that wants to go public may be thinking of expanding its market by opening new offices or expanding the staff hired to multiply its production.
That entails an expense and of course, it must be paid in advance since the benefits do not usually occur in the first moments.

If you decide to buy shares, you are part of the company, you will carry with you both the benefits you get, and the losses you may suffer. Therefore, before investing, you must carry out a preliminary study of the possibilities of each asset. No one blindly bets on the actions of a company, it has to see that it is solvent and that of course its future is promising.

Theory of Elliot Waves

In the days of the old school around the 20’s and 30’s, there was this great genius named Ralph Nelson Elliot. Elliot discovered that stock markets do not really work in a chaotic way as was believed.

Elliot discovered that markets operated in repetitive cycles, which were influenced by the emotions of investors and traders, which in turn were influenced by external factors such as economic news or by the predominant psychology of the masses at that time. .

The Elliot Wave theory explains that the upward or downward changes iven by the psychology of the masses always show the same repetitive patterns, which in turn are divided into patterns that he called waves. Hence the name.

Wave patterns 5-3
Elliot showed that a trend market moves in a way that he called: 5-3.
The first 5 are grouped in the impulse wave pattern. And the last 3 are called corrective waves.

This is a short description of what happens during each wave. The Elliot Wave theory was used in the first instance for actions, since it was what Elliot also used, but it does not really matter. They can easily be used with bonds, gold, oil, … The important thing is that this theory can also be applied to the Forex currency market.

Wave 1
The market initially moves up. This is usually because a small group of people suddenly feel (for various reasons, real or imagined) that the price of the stock is very cheap so it is the perfect time to buy. This causes the price to rise.

Wave 2
At this point, enough people who bought according to the previous wave, consider that the stock is overvalued and decide to take profits by selling. This causes the market to go down. However, the market will not reach its lowest previous point before the stock is considered a bargain again.

Wave 3
This is the longest and strongest wave. The action has caught the attention of the public. More people investigate about the action and want to buy it. This causes the price of the stock to rise more and more. This wave usually exceeds the point reached in wave number 1.

Wave 4
People take profits because the price is considered high again. These waves tend to be weak because there are usually more people who are still selling and still waiting to buy in the falls.

Wave 5
This is the point that is handled mainly by hysteria. You usually see the head of the company on the cover of an important magazine where they name him the “character of the year”.

Teoría de las Ondas de Elliot

The theory of Dow and its applications

Theory Dow – Who was Charles Dow?

Charles Dow was the son of a farmer and was born in Sterling in 1851. His father died when he was only 6 years old. This forced him to leave school and work as a laborer to support his family.

Later he began his career as a journalist. In 1889, he founded the company “Dow Jones Company”. The Dow Jones company published the first index, designed to represent the movement of the stock market. This index was called “Dow Jones”

Theory Dow- Definition

Dow’s trading theory is based on the analysis of maximum and minimum fluctuations of the market.

According to the Dow method, the importance of these maximums and minimums is a function of their location with respect to the previous maximums and minimums.

This methodology allows you to learn how to read a Trading chart and to better understand what happens in an asset at a specific time.

This simple analysis can allow even the most novice of us to identify the context in which an index of Forex or CFD shares evolves.

Another important point! Charles Dow supported the common belief of all traders and technical analysts that the price of an asset and the resulting swings in a Trading chart have all the information available and anticipated necessary.

Trading according to Dow theory
Basic principle:

The principle of the Dow Method in the technical analysis is to use the maximum and minimum points of the market to determine the context of the market, therefore:

If in a Forex chart you can identify a succession of increasingly high peaks and valleys.

Investment an economic and financial issue but also everyday

The concept of investment is used extensively in areas such as the economy, finance and business, although, although these are where it has a formal specification, the word investment is very present in our daily lives and not only Entrepreneurs, traders or stock traders think about investments, ordinary people do it because basically it will involve at least the duplication of a sum of money that is decided to place in favor of a business or a venture.

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That is, those of us who are not specialists in the areas mentioned can invest without problems in what we want, if we have a sum of money that allows us to do so. Even, the majority is advised with specialists or with people with experience in this sense because the idea is that an investment allows to improve the quality of life that is had.

Investments

Investment is an economic term that refers to the placement of capital in an operation, project or business initiative in order to recover it with interest in the event that it generates profits.

For the economy and finance, investments have to do both with saving, with the location of capital and aspects related to consumption. An investment is typically an amount of money that is made available to third parties, a company or a set of actions in order to increase the product of the profits generated by that fund or business project.
Every investment involves both a risk and an opportunity. A risk to the extent that the return of the money invested is not guaranteed, nor the profits. An opportunity in as much the success of the investment can imply the multiplication of the placed money.

In private investment, three different variables are usually considered. The expected return, that is, the profitability that is considered to be positive or negative. The accepted risk, that is, uncertainty about performance, the possibility that the investment will not recover. And finally the time horizon, or the short, medium or long term period during which the investment will be sustained.

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In turn, an investment can be classified according to the object of the investment (equipment or machinery, raw materials, participation in shares, etc.), depending on the function in the enterprise (renovation, expansion, improvement or strategic), and according to the subject or company that makes the investment (private or public).

An investment is the basis of almost any economic project, since a new venture is usually based on the capital received for its management and, therefore, depends on the shareholders willing to assume the risk of investing in a new initiative of which no the future is known.

Bitcoin

Surely Bitcoin is the cryptocurrency you’ve heard the most about. The reason for the fame of this digital currency is that it is the pioneer, in 2008 it was created by several people under the name of Satoshi Nakamoto. Of course, in its launch it did not have the value that it has now and most could not even think that it would reach this data.

No doubt this currency has positioned itself as a leader in the digital market and can be a great investment for this year. However, it has suffered great ups and downs and it is difficult to know when it will go up or down. Therefore, we propose other cryptocurrencies that are worth paying attention to.

How many cryptocurrency or cryptocurrency exist?

Today there are more than 2,500 virtual currencies around the world and rising. In addition every so often a new one appears, which is created by a process called ICO.

What differentiates all these currencies is the technology, the encryption and the philosophy they use. Most crypto currencies use Blockchain technology, but it is not the only one. As for philosophy, it can be said that there are as many as coins.

With the creation of new cryptocurrencies, new platforms have appeared to send, receive and buy different types of cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum and Litecoin. We are talking about Coinbase, a platform and digital wallet that allows to operate with cryptocurrencies in a simple and safe way.

The latest news of the BlockChain boom increasingly predicts the consolidation of virtual currencies, despite falls like the one suffered at the beginning of 2018. This does not mean that they are not safe or profitable, only that we must consider at the moment that find to take advantage of their potential. We tell you what are the criptodivisas of the moment and the ideal to invest this 2019.

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What are cryptocurrencies?

The cryptocurrencies are virtual coins. They can be exchanged and operated like any other traditional currency, but they are beyond the control of governments and financial institutions.

There is a large number of cryptocurrency available, all with their own characteristics and applications. Those that have greater market capitalization are – at least for now – a minority, which includes bitcoin, bitcoin cash, ether, litecoin, ripple and dash.

What is mining cryptocurrencies?

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Minar cryptocurrencies is the process through which cryptocurrency transactions are verified and new units are offered.

The objective of the miners is to collect the latest transactions in blocks (that is, verified sets of transactions) and find a solution to a complex algorithm. Doing this you get a reward: a fixed amount of cryptocurrency. This amount varies according to the cryptocurrency in which you work; The bitcoin reward, for example, is currently 12.5 bitcoins.

The solution to this algorithm is a continuous process and depends on the results of previous algorithms to perform the following calculation. In the same way, the difficulty of the algorithm can be (and is) adjusted frequently, in order to make the work of the miners constant – and even if the processing capacity is improving. This is similar to the rate at which raw materials such as gold enter the market (hence the term ‘mine’).

Pros and cons of investing in Forex

Save a few dollars under the mattress is a form of currency savings that has passed from generation to generation. But the exchange of currencies as a form of investment is more complex and sophisticated than that.

To do it on a large scale, there is the Forex market, specialized in the exchange of currencies among investors from all over the planet. However, before entering it, it is necessary to know its characteristics and risks to avoid putting your heritage at risk, experts agreed.

“It is a fully electronic market and operates 24 hours a day through financial centers around the world, so it does not have a physical place of operation (since everything is done through the Internet),” he explained. General Director of Forex and Currency Research Center of the foreign exchange trading company Alpari, Roberto Pasalagua.

However, because of the volatility that characterizes this market, its aims are mainly speculative, that is, many people invest with the expectation of obtaining juicy profits in a short time; However, due to the volatility that characterizes it, “as well as it can be earned, it can be lost”, warned the managing partner of the financial advisory firm Privest, Antonio Díaz Bonnet.

In order to participate, it is necessary to go to a broker (operator) who provides the user with access to an electronic platform and who, for each operation performed by the user, charges a commission. The amount of contract opening may vary, but there are companies that request a minimum investment amount of $ 500.

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The risks

In general terms, specialists identify two types of risks when investing in Forex: the market, which refers to possible losses due to currency volatility, as well as the problem of investing through a company that is not regulated by the Mexican authorities.

“In Mexico, this market is not regulated, which means that in the country there is no authority that can support the participants if they need it,” said Mauricio Sotomayor, manager of Private Banking at Actinver Casa de Bolsa.

The companies that offer this service to Mexican investors are only representatives of foreign companies and therefore they are not financial institutions, according to information from the National Commission for the Protection and Defense of Users and Financial Services (Condusef).

Alpari, for example, is a company that offers its platform to Mexican participants, but which is not based in Mexico. Here they only have a call canter through which they give technical, non-financial support to local and Latin American investors who access their platform, explained Pasalagua.

This service is not offered by financial institutions, so the operation runs 100% on behalf of the investor, without support or advice.

“There is no international body to regulate all the activities of the Forex market worldwide because it is very large, however there are some bodies such as the Commodities Futures Trading Commission in the United States that regulates the market for the United States and Canada, and the Securities and Futures Associations in London for Europe “, according to information from Condusef.

What is the risk of Forex?

The main risk of forex lies in leverage. Leverage multiplies my profits, but if the market goes in the opposite direction to where I think (which will happen very frequently), my losses multiply. In fact, there is a lot of people losing their investment. Forex is very risky, and to lower the risk there are two options:

A lot of experience in technical investment analysis is needed in the first instance to operate leveraged
I must operate only with my own resources without leveraging myself. So you should have about 10,000 dollars ($ 217,370.00 Mexican pesos) and be willing to invest. Even so, you run the risk of losing all the money if you do not have experience.

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