If you happen to watch 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’s their significance? To answer your questions, here’s a synopsis 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 refer to the capital raised with a corporation in the shape of issuing and sharing shares. These are traded in a share market in the same way 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 named stock exchange.
Stock market trading takes place 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 a share market trading is the traditional way stocks are traded. It’s called “open outcry” considering that 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 does 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 invested in 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 anything may now be performed conveniently online. You are able to go shopping on the internet, join conferences online, read news online and keep in touch with business partners wherever you are. Even stock market trading may now be performed virtually and this has made entering into a business much easier for everyone interested. Aside from conducting stock market trading within the Internet, you can even conveniently check status of one’s investments online.
The advantages of online stock market trading are just endless. Aside from the above mentioned, choosing where to invest can also be much easier online. You’ll find virtually a myriad of stocks within the Internet; however, it could be best to invest in stocks with moving prices to make certain profitability in the long run.
Disadvantages of Stock Market Trading
One of the greatest drawbacks of stock market trading, whether online or not, is its lower leverage compared to other forms of trading like Forex trading. Also, you cannot easily short sell stocks since it takes time for stock prices to go up. Which means increasing your profit could also take time.