Stock Market Explanation

What is the Stock Market & How to Invest in Stock Market?

What is the Stock Market?

A stock market is a place where thousands of shares of public listed companies are traded. These Financial activities are conducted through institutionalized formal exchanges marketplaces that operate under a defined set of regulations. There can be multiple stock trading venues in a country or a region.

Stock Market & Stock Exchange

Once new securities have been sold in the main market, they are traded in the secondary market—where one investor buys shares from another investor at the prevailing market price or at whatever price both the buyer and seller agree upon. The secondary market or the stock exchanges are regulated by the regulatory authority. In India, the Security and Exchange Board of India (SEBI) governed the primary and secondary markets.

The stock exchange handles stockbrokers to trade company stocks and other securities. A stock may be bought or sold only if it is listed on an exchange. Thus, it is the meeting place of the stock buyers and sellers. India’s premier stock exchanges are the Bombay Stock Exchange and the National Stock Exchange.

The New York Stock Exchange (NYSE), Nasdaq, the Better Alternative Trading System (BATS). and the Chicago Board Options Exchange (CBOE). These leading national exchanges, along with several other exchanges operating in the country, form the stock market of the U.S.

Why shares are traded in the Stock Market?

To raise money to grow their business. Investors buy stocks of a company whatever he likes, this money which is used to buy stock works for the company as funding to grow business. As the company grows its stock price will also rise. So, Investors can sell the stocks of that company and make profits.

Also read about -: Share Market Beginner Guide

How the Stock Market Works

To understand the process of how this works, Let’s take an example,

The stock market allows companies to issue and sell their shares to the common public for the first time through the process of IPO(Initial Public Offerings). This helps the company to raise the necessary funding they need. So, Company divides itself in (50million shares) and sells the part (10million shares) to the public at a price of $15 per share.

This Marketplace is provided to the company by the Stock Market. If everything goes with the plan then the company successfully raises $150 million funding. Investors will get the company shares which they want to hold for their preferred duration, in making profits in the future.

The stock exchange takes the responsibility to price transparency, liquidity, price discovery.

How to Invest In Stock Market?

There are two ways to invest -:

  • Learn to find stock yourself
  • Take help from someone to help you

Open an Investment Account

Opening a Brokerage account -: If you want to invest in the stock market by yourself then open a brokerage account they will help you in quick buying and selling of stocks. Some brokers are-:

  • Ameritrade
  • E*Trade
  • Merrill

Opening a Robo-Advisor Account-: If you want to invest but no to picking up stocks. A Robo-advisor offers the benefits of stock investing but doesn’t require its owner to do the legwork required to pick individual investments. Some Robo-Advisor Broker are-:

  • Betterment
  • Ally Invest
  • WealthFront

Always set a budget for Stock Investment

Before investing in the stock market always set a budget for your investments. How much money need to start investing in the stock market depends on your shares. How expensive the share is? More expensive the share more will be the budget.

Always Do Value Investing

Value Investing plays an important role in making profits in the Stock market.

Read About -: How to calculate Valuation of a Company

Start Investing

Stock investing is includes intricate strategies and approaches, yet some of the most successful investors have done little more than stick with the basics.

If you want to Invest money but doesn’t have time to pick stocks or wanted to grow the money you can consult him

Frank Matthew – Financial Consultant & Expert Forex Trader

Email -: [email protected]

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