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Introduction to the Stock Market

Introduction to the Stock Market

In this article, Introduction to the Stock Market, we will be going over the basic of what the Stock market is. This subject is huge, but for now we will lightly touch on the key terms. This will help you get an idea about stock trading is.

The term stock market, as the name sounds, is a place where you can market or trade a company’s stock. This is done via the corporation when they issue shares.  This in turn raise cash for the corporation, which they may spend on what every they want, well as long as the board allows it. Of course, capital is the cost that a company sustains when producing its products and services.

 

The people who buy these shares are called the shareholders, and the term can refer to an individual or an organization. The stockholder who has bought shares in a company now owns a small or large part of it. The term stock market can also apply to all the stocks available for trading (as well as other securities), for example, when used in terms like “the stock market performed well today.”

The stock market involves the trading of bonds, which is a debt security that specifies that the issuer of the bonds holds the holders a debt. It is exactly like a loan, only that it is in the form of a security. These bonds are traded over-the-counter, which means they are traded straight between two parties. This is opposed to exchange trading or the trading that occurs on stock exchanges or future exchanges.

The stock market also comprises the trading of commodities, which refer to raw commodities such as agricultural products (coffee, sugar, wheat, maize, barley, cocoa, milk products) and other raw materials (pork bellies, oil, metals). The stock market is different from the stock exchange, which is primarily concerned with bringing together buyers and sellers of stock and securities.

You can take part in the stock exchange as an individual stock investor or as major player (large hedge fund trader). Orders at a stock exchange are usually made through a broker.

There are two types of exchanges where stocks can be traded. There is the exchange that has a physical location where verbal trading takes place. This is the more well-known type of exchange because it is often depicted on TV showing energetic trader shouting at each other, waving and running around frantically. That’s exactly how the stock exchange works. What happens is traders enter into verbal agreements on the prices of stocks. The other type of exchange is the virtual kind where traders deal electronically through computer.

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