Stocks are one of the most popular investment instruments because they offer attractive long-term profit potential. However, before investing, it’s essential to understand how stocks work to make wiser and more measured decisions.
Simply put, a stock is proof of ownership in a company. When you buy a stock, you own a portion of that company according to the number of shares purchased. In other words, the more shares you hold, the greater your ownership and profit potential.
Read also: How to Easily Calculate a Stock’s Fair Value
Stock Trading Process
Stock trading takes place in the capital market managed by stock exchanges such as the Indonesia Stock Exchange (IDX). Investors can buy or sell shares through intermediaries called securities companies. All transactions are conducted electronically using official trading systems supervised by financial authorities to ensure transparency and security.
Stock prices are determined by market mechanisms—supply and demand. When many people want to buy a particular stock, its price tends to rise. Conversely, if more people sell, the price falls. These fluctuations present both opportunities and risks for investors.
Publicly listed companies also publish periodic financial reports. This information helps investors analyze company performance and decide whether to buy, hold, or sell their shares.
How Investors Earn Profit from Stocks
There are two main sources of profit from stock investments: capital gains and dividends.
1. Capital Gain
A capital gain is the profit from the difference between a stock’s purchase and selling price. For example, if you buy a stock at Rp5,000 per share and sell it when the price rises to Rp6,500, the Rp1,500 difference is your capital gain.
2. Dividend
Dividends are the distribution of a company’s profits to shareholders. The amount depends on company policy and performance during a given period. Stable and profitable companies usually distribute dividends regularly.
In addition to these two sources, investors can also benefit from the long-term increase in stock value, reflecting the company’s growth. However, it’s important to remember that stocks also carry the risk of loss if prices drop or company performance declines.
Factors Affecting Stock Prices
Several factors influence stock price movements, including:
- Company Performance: Good financial reports boost investor confidence.
- Economic Conditions: Macroeconomic factors such as inflation, interest rates, and exchange rates can affect market sentiment.
- Global and Political Issues: Political instability or global crises often make investors cautious.
- Market Psychology: Positive or negative sentiment can trigger sharp short-term price movements.
Read also: Complete Stock Investment Guide for Beginners
Basic Investment Strategies
To minimize risks, investors should have solid strategies. One approach is long-term investing, since over time, stock prices tend to follow economic growth. Portfolio diversification is also crucial to reduce losses from a single stock.
Beginners are advised to learn both fundamental analysis (focusing on company conditions) and technical analysis (focusing on price movement patterns) before making investment decisions.
Digital Stock Investment Through Tokens
Today, stock investing is no longer limited to traditional exchanges. Thanks to blockchain technology, innovations such as tokenized U.S. stocks have emerged. These tokens represent shares of major global companies—like Tesla, Apple, or NVIDIA—traded digitally.
Through Mobee, you can gain exposure to U.S. stocks in token form—easily, quickly, and affordably. There’s no need for an international brokerage account since all transactions occur transparently and securely on the blockchain.
Conclusion
Understanding how stocks work is the first step before investing. By learning how stocks are traded, where profits come from, and what factors affect prices, investors can make smarter decisions. For those looking to explore new opportunities in digital finance, investing in tokenized U.S. stocks on Mobee offers a modern and exciting alternative.
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