STOCK MARKET

Introduction:

Before we get into the main topic, let us first understand the meaning of the words stocks and shares. Stock represents a share of ownership in a financial institution, while share is a unit which focuses on the share of profit and losses of that particular company. The whole idea of stock market is to deal with shares of a company by buying them. It is any other business where there are profits as well as losses. When a person wants to buy a particular share of a company, he must know what amount to buy and when he must sell them so that he wouldn’t be in possession of it when the share crashes. This is the whole idea of stock market.

In detail:

Now that we have an idea of what exactly the term stock market is, let us venture in to the depth of it. Different types of stocks are present. They are common stock and preferred stock.
As the name indicates, common stock is widely seen and often purchased buy the common man. It represents ownership in a company and a claim on a portion of profits. Common stocks, in the long run yield higher returns when compared to the other investments. And it is worth the price since it is very risky as well.
Preferred stock represents some degree of ownership in the company but it does not come with the voting right. This is not at all a risky affair since no matter what, the investors are guaranteed a fixed dividend which is forever. Although it is an added advantage, it does not yield the profit that a common stock does; infact investors of a preferred stock consider it as a debt than equity.

Trading:

Now let us see how a stock is traded. The stocks are mostly traded through exchange. Bombay stock exchange (BSE) and National stock exchange (NSE) are the best examples of trading exchange. It mainly constitutes of places where the sellers and the buyers meet and decide on the price of a particular stock. It’s a business where each second counts since a share which carries a high price can go low in the next minute. Hence the traders and investors are on their toes and do not waste a single minute. The other type of exchange is virtual wherein trading is done through a network of computers where trading is done electronically. This is convenient since the investors need not go to the exchange but can sit at one place and see the updates through the internet. There are many websites which help the traders for the same, for eg: sharekhan, moneycontrol, market volume, yahoo finance etc…
The purpose of a stock market is to facilitate the exchange of securities and at the same time reducing the risks of investing. It is important for us to distinguish between primary market and secondary market. In primary market, securities are created while in secondary market, investors trade previously issued securities without getting the company involved.
Now let us see why exactly the stocks change. It is because of demand and supply. If the amount of people who want a stock is high, sell the stock and hence the price increases and vice versa. Another important question is, why would so many people want a particular stock? The answer lies on the company issuing that stock. That again depends on what news is positive and what news is negative for that company.

How to read a stock table:
The stock table is designed in such a way that the common man can understand. It is mainly a graph and not o documentation which needs certain amount of time. You can just gauge the graph to know the statistics. To make it easier, the graph gives the latest update every 30 seconds. All that a trader has to do is reload the page and he has all the information he ever needs on the current stocks.

Conclusion:
Stock market is a great way to make money but if a person ventures into it only for the sake of money, it is not advisable. This is because you get to learn a lot about the company when you decide to buy a share. That will help you in the long run. Finally to sum it up, stock market is any other business where there are profits as well as losses, so do not think only on the profit front.