How Does the Stock Market Work?

How does the Stock Market Work

From a small business to a share holder, this is the biggest business transformation that one can ever try. Stock market can make you richer in just one day, but it can bring you so much burden if you are lacking information on what a stock market is. Especially this time that we are battling a global financial crisis, knowledge in investing in a stock market should be properly applied to avoid downfall of the business. For beginners, it is a must that you know the terminologies and features of a stock market.

To define the term, stock market is a public market for the trading of company stock and derivatives at an agreed price. They are securities listed on a stock exchange as well as those only traded privately. It is a venue where company stocks and shares are traded, bought and sold, just like a supermarket. One of its features is that, the liquidity that an exchange provides enables investors to quickly and easily sell securities. Stock market is one of the most important sources for a company to raise money.

Knowing how a stock market works is very easy. The most basic information about stock market is: Companies go public to share their company. The public buys the shares through stock exchange. Investors can now use the stock exchange to buy and sell stocks of companies that they are interested. Of course, this is only the basic, it is better if you'll have further knowledge about stock market investment.

The most common term that you will hear in this industry is Stock Prices. Stock prices is the price that a stock sells for. The price is affected by the economy condition, current trading trend and technical and financial reports put out by the company.

There are two leveraged strategies that a stock holder can use for his share to prosper. Short selling is when a trader borrowed stock, usually from his brokerage, and sell it on the market, hoping the price to fall. The trader then will buy the stock, earning if the price fell and loosing if it went up. This strategy is used by ruthless traders to artificially lower the price of a stock. This is illegal but not in all stock markets.

Margin buying is another strategy wherein borrows money, with an interest, to buy a stock and hopes for it to rise. If the borrowing is based on collateral from other stocks the trader owns outright, it can be a maximum of a certain percentage of those other stocks' value.

Investment strategies are methods that stock holder must keep. There are two strategies. Fundamental analysis is the analysis of companies by their financial statements found in SEC Filings, business trends, general economic condition, etc. Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company's financial prospects.

These information is not enough, success is still a long way in investing in a stock market. But it easy when you turn to a some change management consultants and ask about clarifications and further knowledge about the future of your business.

How does the Stock Market Work

How Does the Stock Market Work?

How does the Stock Market Work

Before you start investing in the stock market it is a good idea to ask yourself, “How does the stock market work?” The answer to this question is simple. Companies go public by offering a specific number of shares in their company to the public through the stock exchange. Investors then can use the stock exchange to buy and sell stocks of companies that they are interested in. While this basic description of how the stock market works is adequate enough to understand what the stock market is, to get a better understanding of how it actually works it will be important to learn about some of the terms that are commonly used when discussing the stock exchange including stock prices and market capitalization.

The first term that you may hear when you start learning about how the stock market works is stock prices. Stock prices are the price that a specific stock sells for. This price is set by several market factors including the health of the economy, trading trends, spending trends, and financial or technical reports put out by a company or an independent third party. The next term that you may hear about is market capitalization. Market capitalization is the value of the company or the stock that is being offered. To calculate the market capitalization of a company, or stock, simply use this formula: The number of outstanding shares X the price of the stock = market capitalization of the company.

After you learn about the basics features of the stock exchange you will next need to learn how to buy and sell shares. To buy a stock you will need to establish some kind of investment account. In most cases you will open an investment account with a stock broker that works at a local firm. However, today you can also open an online investment account and make trades without the help of a stock broker. After you have set up your account you will need to fund it before you can make a purchase. Once your account is funded you will be able to enter your order for a stock purchase. When you are ready to sell your shares you will either tell your stock broker that you want to sell X number of shares of Company A, or you will need to enter a sell order via your online investment account.

Credit to: Sarah Freeland

How does the Stock Market Work

How Does the Stock Market Work? A Guide For Beginners

How does the Stock Market Work

If you are a beginner, you are probably wondering how does the stock market work? The answer is surprisingly simple: Companies go public and offer shares in their company to the public. The public buys the shares through what we know as the stock exchange. Investors can then use the stock exchange to buy and sell the stocks of the companies. Buying low and selling high can make people rich overnight. Of course you have to know what you are doing, and there are many factors involved. To gain a deeper understanding of how the stock market works, why don't we discuss a few of the most common terms.

Stock Prices: Stock prices are, to make it simple, the price that a specific stock sells for. This price is set by many market factors including the economy health, current trading trends, and technical and financial reports put out by the company (or independent third party).

Market Captialization: This is the actual value of the company or stock that is up for sale. Calculating the market capitalization of a stock is done by using the following formula -

Number of Outstanding Shares X Price of Stock = Market Capitalization of the Company

Once you have learned the basic premise of the stock exchange, you will want to learn how to buy and sell shares. To purchase stock you will need to create some type of investment account. Most times you can open up an account with a local stock broker. Thanks to the wonder of the internet, you can now make trades online on your own. It is as simple as setting up an account and funding it.

Hopefully now you have the answer to your question, how does the stock market work. The next step will be to learn how to successfully profit from trading. Good luck!

Credit to: Matt Bush

How does the Stock Market Work