Understanding the Stock Market for beginners
We all keep hearing stories of people who made a killing in the stock market or someone invested $1000 in particular stock in 1999 and nowthat stock holding is worth millions of dollars or someone got a return of 4000% on his initial investment in the stock market . Wonderful stories to hear and yes a lot of them are true also.
But ever wondered how does the stock market work and what goes in into making such kind of money in the stock market.
Do not get intrigued by the stock market but just start by understanding the stock market and getting to know the very basic terms and how the stock market functions.
A few basic explanations of the terms that will help you get the understanding of the stock market basics are described below.
What is a stock? The simple answer to this question is that it represents the ownership of the company’s assets and profits. The ownership may be if you start to calculate in percentage terms may represent only .005% of a company or even lesser based on how much shares are issued to the public from the total number of shares.
What is a stock exchange? Let us look from the angle that you are .005% owner of a company and would want to sell your portion of the company to somebody else. That avenue where you would go to sell those shares is what is called a Stock Exchange.
Physical Stock Exchange – New York Stock Exchange is an example of a physical stock exchange. By physical it means that in theory you can go there and sell your share of .005% though in all practicality you will not be allowed to do so and what you would need to do is contact a stock broker or a brokerage firm who would in turn contact somebody who is allowed to buy and sell shares on the floor of the exchange and these
brokers would charge you a fee or brokerage for selling your shares.
Online Stock Exchange – In today’s world of computers and advanced technology, you would need to leave your house and try to sell your share. All you would need is an account with a firm authorized to trade on the virtual stock exchange. This virtual stock exchange eliminates the need to have a physical place to buy or sell shares. On such stock
excahge which you hear very commonly is National Association of Securities Dealers Automated Quotations System or NASDAQ.
What is a share price ? Let us say that your share of .005% is in great demand and somebody would be willing to a pay higher price than what you would have bought it at. That means you have made a profit or else the negative can happen that it is not in great demand since the company is not doing good then you may have to sell at a lower price. So, really at any given point of time there are people who think the company is doing
good and would be willing to pay you a higher price or some people who would be willing to sell at that price as they have made a decent amount of profit and are willing to get out or they think that the price is likely to go down and they are trying to sell the same share.
Stock Market for beginners can be challenging and treacherous to navigate but if you play your strategies right, you can definitely reap some handsome rewards.
Related posts:
- Understanding the stock market investing for beginners
- Stock Market investing for beginners – What is a Stock Market Index?
- Finding Stock Symbols – A Must Know For Stock Market Beginners
- Stock Portfolio is a must for Stock Market Beginners
- Stock Market For Beginners – Investing Carnival for the beginners
Filed Under Stock Market Basics | Leave a Comment
Tagged With NASDAQ, NYSE, stock, Stock Market, Stock market investing, Sttock Market for beginners
Comments
Leave a Reply