How is money made in the stock market?

Question

How is money made in the stock market?

Answer 1

Buy low and sell high is one method.

Buy high and sell higher is another way.

Sell short and buy after the stock drops is another technique.

None of these are easy to achieve.  The easiest way to make money in the market is to be the broker that sells the stocks.

Answer 2

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Answer 3

A person or group of people start a company and decide to 'go public'

they offer to sell part of their company to anyone who wishes to buy.  A 'stock' represent a piece of their company.  They can decided the price per stock.

Person B buys some stock from the company.  As time passes the company become more successful.  Person C decides he wants to buy stock from this company.  He can buy from the group of people that started the company of he can buy person B.

Maybe nobody wants to sell him stock because they want to keep it all from themselves.  Person C will have to increase is spending price or choose not to buy.

Finally person B sells to person C for more money the he bought it for.  Thus person B has made money on the stock market.

Answer 4

Many investors buy stocks  at a given price with the anticipation of the price going higher, and selling it when it reaches a point that produces enough profit to satisfy the investor

There are many investors who buy stocks with who expect them to go higher in price, and while they are waiting for a price rise, they expect the company to pay dividends to all the shareholders.  This dividends generate income for the investor.

Some investors with large stock holdings will lend their securities to brokerage firms so they can be lent to other investors for short selling. The lending of securities produces cash flow for the investor who will use it to buy other securities.

There are some traders/investors who will think a particular stock is going to drop in value, they will sell the stock at the higher price and hope to buy it back at a lower price, this is known as selling short.

Some investors who hold certain securities will write option contracts against them and will use the premium they recieve as a source of income.  This is known as writing covered calls