I happened to see someone asking how to get started with investing in stocks, so I’d like to share my understanding.

To be honest, most people’s understanding of stocks is actually pretty vague. Some think it’s speculation, while others think it’s investing. In reality, both are right—it all depends on how you play the game.

Stocks, at their core, are certificates representing shares in a company. When you buy stocks, you effectively become a shareholder of that company, with the corresponding voting rights and rights to distributions. Even if you only hold 0.01% of the shares, you have 0.01% of the voting rights (in places where voting rights are the same for all shares). The earliest stocks were paper-based; now they are all electronic and traded online.

But there’s an interesting point here—stocks themselves have no practical utility value. If you own 5% of the stock, in theory you own 5% of the company’s assets. However, this only becomes truly realized when the company goes bankrupt and is liquidated, and even then you’re paid after debts, taxes, and liquidation costs. So for ordinary retail investors, stockholders are actually the last group to receive money.

So why invest in stocks at all? First, you can participate in distributions. When a company makes money, the distributions belong to the shareholders. But there’s a common misconception here—whether or not a company distributes does not really have much impact on the market value of your account. The company’s profitability has already been reflected in the stock price. For example, suppose a company has a market value of 5 billion, and it issues 5 billion shares, at 1 dollar per share. Later it earns 1 billion, so its market value becomes 6 billion, and each share becomes 1.2 dollars. If the company then distributes 1 billion in distributions, the company’s market value goes back to 5 billion, and the stock price “drops” back to 1 dollar. You’re just converting accounting profits from the stock form into cash.

The real way to make money still comes from the price spread—buy low and sell high. This is where supply and demand come in. In the end, stock prices are determined by the supply and demand between buyers and sellers. When a company performs well and expectations are positive, more people want to buy, and the price naturally rises. But sometimes contradictions occur—for instance, the company’s earnings are good news, yet major shareholders urgently need cash and aggressively sell off, and the stock price still falls. So what ultimately determines the stock price is people’s expectations, and those expectations are eventually reflected in supply and demand.

As for the specific ways to invest in stocks, there are a few options. The simplest is to buy ETFs—let professional institutions help you pick stocks, and you only need to buy fund shares. Risk is relatively lower, making it suitable for beginners.

If you want to pick stocks yourself, you can consider long-term value investing. By studying the company’s fundamentals, look for companies with stable performance and long-term growth potential, then hold them for the long term. This approach requires some capital and patience, but the returns tend to be relatively stable. You can also look at indicators like the price-to-earnings (P/E) ratio. If the P/E ratio is 10, it means you need 10 years to earn back what you put in.

If you’re interested in trend analysis, you can also do swing trading. Buy at the bottom of an uptrend channel on the price chart, sell at the top of a given phase, and profit from the price difference. This approach requires more market experience and stronger psychological resilience.

Another approach is leveraged trading. If your capital is insufficient but you want to grow your funds quickly, you can consider derivatives such as contracts for difference (CFDs). Compared with futures, CFDs are more friendly to ordinary investors: they support two-way trading, T+0 meaning buy and sell immediately, and the leverage is also more flexible. There is risk, of course—but if you can bear it, having your assets double in a day isn’t just a dream.

That said, honestly, making money from stock investing isn’t easy. Your opponents are institutions with huge capital and experienced traders. As a beginner, you need to keep learning financial knowledge and trading psychology, and also be able to judge future trends. It’s recommended to read more related books, but don’t be overly superstitious about technical analysis, because true technical analysis requires you to research and verify it yourself.

All in all, the core of stock investing is having vision and judgment. Choose a strategy that fits your style, keep learning and improving—those are the keys to ultimately winning.