If you happen to view a business show or business news on TV, you’d probably hear words or phrases like “stock market,”‘trading,” “stocks” or “stock market trading.” What are these exact things and what is their significance? To answer your questions, here’s an overview about what stock market trading is.
In simple terms, stock market trading could be the voluntary buying and selling or exchange of company stocks and their derivatives. Stocks reference the capital raised by a corporation through issuing and sharing shares. They’re traded in an investment market just as commodities like coffee, sugar, wheat and rice are traded in a commodity market. The physical or virtual (as trading may take place online) marketplace for trading shares on one other hand is called stock exchange.
Stock market trading occurs as one sells his stocks and as one other buys them. Usually buyers and sellers of stocks meet in stock exchanges and there they agree on the price of the stocks. Alpho The particular stock market trading happens on a trading floor–the one usually shown on TV when news on stock market trading are reported. Here investors raise their arms, throwing signals to each other. That auction-like picture of an investment market trading is the standard way stocks are traded. It’s called “open outcry” since the traders cry out their bids.
Key Players in Stock Market Trading
Stock market trading participants vary from persons selling small individual stock investments to institutions trading collective investments, hedge funds, pension funds, mutual funds, etc. Big investors can be banks, insurance companies and other huge companies.
Importance of Stock Market Trading
Stock market trading must foster economic growth. It will this by helping companies raise capital or by helping them handle their financial problems. Stock market trading helps make sure that the capital is saved and is committed to most profitable business. Moreover, stock market facilitates the transfer of payments between traders.
Online Stock Market Trading
With the emergence and popularity of the Internet, almost everything is now able to be done conveniently online. You can go shopping on the internet, join conferences online, read news online and speak with business partners wherever you are. Even stock market trading is now able to be done virtually and this has made entering into a business much easier for anyone interested. Besides conducting stock market trading within the Internet, you can even conveniently check status of your investments online.
The benefits of online stock market trading are just endless. Besides the previously discussed, choosing where you can invest is also much easier online. You will find virtually a myriad of stocks within the Internet; however, it would be best to invest in stocks with moving prices to make sure profitability in the long run.
Disadvantages of Stock Market Trading
Among the greatest drawbacks of stock market trading, whether online or not, is its lower leverage compared to other designs of trading like Forex trading. Also, you cannot easily short sell stocks because it does take time for stock prices to go up. This means that increasing your profit may also take time.