Beginners guide to the stock market
Stock Market is the most overrated and at the same time underrated market. Every individual has heard about this huge capitalist market. Stock market trading is a dream for millions and this is the main profession for other millions. There are different views on trading. It is a place of income for many, it is a place suspicion for others and it is a place of risk for many more.
If you are here you are somewhere close to the thought of learning the stock market and wanted to understand it in detail. This article gives you basic details about the stock market and tries to cover to the maximum extent the information required to get started the stock market trading. Or at least give it to yourself enough information to decide. So let’s begin. The information is compiled in a sequential manner the information you need to know right from basic. So go till the end to find out all the details clearly.
What is a Stock Market
Yeah!, This can be defined in many ways. We will explain to you it in detail. before let’s see what Wikipedia has to say about the stock market.
A Stock market is the aggregation of buyers and sellers of stock which represent ownership claims on businesses; these may include securities listed on a public stock exchange as well as the stock that is only traded privately such as shares of private companies that are sold to investors through equity crowdfunding platforms.Wikipedia
So, basically, the stock market defines a place, where different individuals and companies can buy or sell shares. consider is as a market of shares. any individual who has minimum qualifications can buy the shares and sell the shares in the company if he finds suitable seller and buyer respectively. Without buyers or sellers, there is no stock market. Only where there is a buyer to buy the shares, another one can sell the share to him, and only when there is a seller one can buy the shares from him, and the price at which these transactions happen will depend on many factors, the seller and buyers define there own price but it is not guaranteed that they get whatever price they wanted. It is completely dependent on the market conditions. Only those transactions f buy and sell happen when the buyer and seller quote the same price and this is the price of the stock of that particular company. Make sense?
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What is stock then?
Stock is also called as a share. Stock or share is part ownership of a company that is being brought and sold. When you brought a share literally mean that, you have actually become a part of owners of that company and how much ownership you have on the company depends on the amount of share you brought of that particular company. If you enough share you can even become a member of the board of directors of that company. But being an owner you are taking the risk of losing the capital if the company gets into losses.
Stock buying and selling is a method by which individuals or institutions buy the ownership of the company and when the company made huge profits they make profits and just exit from the company. The market is a more popular place for profit-making rather than becoming a member of a company or owner of a company. But there is an instance when a person or an institution brought enough shares to take over another company and became the companies new owner.
Why buy a stock?
Basically one will be of the view that the stock market is for making money. To some extent, this may be true. At the end, everyone’s motive is to get some money from the market.
But few people do buying and selling and make a profit and few gain the ownership of the company and gain the profit if the company becomes successful.
Most of the cases people are not interested in ownership they want to buy the stock at a lower price and sell the stock at a higher price and book the difference as a profit. It is the ultimate goal.
Where to buy stock in a company.
To understand this first it is necessary to understand that who manages these stocks of a company. Where all these stocks transactions occur.
Basically, there will be stock markets. Examples are NSE and BSE in India and there are different in different parts of the world. A company can list themselves in anyone of the stock market or can even list in multiple markets or commonly known as Exchanges
These exchanges are private companies that manage these stocks of companies and all the buying and selling of stocks happens on these companies’ servers.
One thing to remember here is that you cannot directly sell or buy stock from these Exchanges. They won’t directly deal with the individual. They only do with brokers.
A stockbroker is the one who will be the link between the public and exchanges. you can only buy or sell shares from these brokers.
To do these you need to have an account with a stockbroker. There are many stockbrokers in India and across the world. Below are a few. You can click on the link and register on them. It is very important to know that without actually having an account your interest to learn and invest won’t be true. It is very important that you open an account first and then start doing very small trades to actually understand. Do very small ones so that you will understand what actually happens.
These are the top discount brokers. Even several banks provide trading accounts. You can even open one with banks. But normally the charges with banks will be higher compared to discount brokers.
Now you might be having a basic idea of what is stock market and what happens in the stock market. Let’s continue learning more.
Pro tip: Open an account first by clicking one of the links above. Without having an account your learning in the stock market is difficult.