When you come across various terminologies used to describe stock markets you find yourself at loss? Others are minting fortunes by dabbling in stocks while you are falling behind? If your answer to above is affirmative then www.stockmarketforbeginners.co.uk is the site which you should consult in order to make most out of the stocks market.
Nowadays everyday news headlines talks about stock market, the fall, the rise and how this movement seems to be governing every other economic activity around. It would not be an overstatement to call a stock market a reflection of the heath of the economy of a country or a market in general.
Here are some basics about stocks market which will guide you through the confusing maze of share trading in stock markets:
In Economics terminology "A market is place where commodities and services are bought and sold" similarly when we talk about stock market its a place where shares of a particular company are bought or sold. London stock exchange (LSE), New York Stock Exchange (NYSE) etc are the stock markets of respective economies. One country may have multiple stock exchanges.
A share basically shows your fraction of ownership in the company. For example if there are 100 shares of a company X in the market and you buy 10 shares of company then your ownership is 1/10th in the company. However it is much more intricate than this, as there are lots of other factors determining the share trade in a stock market. Both the shares and securities of the company are called the stock of the company.
Listing in the stock Market: This is basically like putting the item of the display in a shop and let people decide if they want to buy it. For shares of a company to be traded they need to enlist themselves on a stock exchange. Most of the companies trade their stock on one stock exchange only unless they are large enough to have business in markets more than one.
Pricing: Once the company is listed on the stock exchange its price of shares fluctuates. There are no set rules governing this price variation mostly pure supply and demand forces and investor sentiments determine the pricing of these shares.
Bull and Bear market: When the stock market is running above its previous levels then we call it a bull market, this essentially means that the prices of the share listed are trading at higher than previous levels.
On the other hand when the stock market is running at lower than its previous levels we call it a bear market. This means that the prices of the listed share are trading at lower than previous levels.
The bull and the bear phases of market indicate the strength of the economic activity like when the market is bullish the employment level is high, per capita income is high on the other hand in bear market unemployment rises, per capita income drops.
Other trading alternatives: A stock exchange not only operates in stock market but also in many others like futures and option market, currency exchange.
Foreign currency Exchange: In this type of trading the investors take advantages of fluctuating currency exchange rates by moving large sums of money from one currency to another.
Options and Futures trading: This trading gives the investor an option to speculate the prices in future and take advantages of the favorable price movement.
Modes of trading: In a stock market there are various ways you can trade.
Day trading: Buy and sell the stock, share or commodity within the same day.
Swing trading: Buy and sell the stock, share or commodity at opposite ends of the swings caused due to daily or weekly price volatility.
Long term trading: Buy the stock share or commodity for long term or stay invested.
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