How Can You Double Your Money in the Stock Market?

When you invest in the stock market, you can make money two different ways, or both. One way is through dividends. Companies may choose to pay dividends to their stockholders. A dividend is part of the company's net income that they pay to stockholders. For example, they could decide to pay 25 cents for every share you own in a quarter. This would mean that if you had 100 shares, they would pay you $25. They usually pay dividends quarterly, and are not required to pay every quarter or at all.

If you don't make money through dividends, you can still make money through capital gains. When you buy 100 shares of a stock for $400, or $4 a share, and the price goes up to $5 a share and you sell it for $500, you have made a capital gain of $500 minus $400 which is equal to a $100 capital gain. A company does not decide what a capital gain will be like they do with dividends. This is entirely dependent on what the markets do. It is all a matter of supply and demand.

This is basically how it works, oversimplified. If a stock is selling for $5, there are 100,000 shares up for sale, and 100,000 shares are being bought or ordered, the price will stay the same because the exact amount of demand is being supplied since it has cost $5. If the there are 100,000 shares up for sale, and 200,000 shares are being bought or ordered, the price will go up because the demand has surpassed the supply. More people want to buy than are willing to sell therefore, the price must go up in order. If there are 100,000 shares up for sale, and 50,000 shares are being bought or ordered, they must lower the price in order to get more people to buy.

Here is a real world example. Think of a department store selling jeans. They have 30 pairs of jeans in stock selling for $50 each. If after a couple of weeks, they have only sold 10 pairs, they will lower the price in order to sell off the rest. When people see that they are cheaper, they are more likely to buy. On the other hand, if they only put out 10 of the pairs to begin with and they flew off the shelves in one day, they would increase the price on the rest to decrease the amount of people willing to pay for them in order to meet demand. They will also make more money this way, which is why most sellers want to increase the demand without decreasing the price.

The only way to double your money in the stock market is to make 100 percent of what you put into it. If you bought 100 shares of stock at $50 dollars a share and sold it at $100 a share, you have doubled your money. I'm sorry to say this will rarely happen in one year or less, but who knows, you might just be able to find that lucky stock!

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