Decoding the Stock Market


An average job owner currently has a little money to spare and wants to invest it wisely in the stock market. However, the desire to invest is not matched with actual knowledge about the best investments. As a result, a person can feel disoriented by the sheer volume of confusing terminologies of the stock trade and what they mean.

It is possible to decode the puzzle with just a little assistance, and that can make investing in stocks not just an unpredictable gamble, but an assured capital gain. Read on for definitive information about the nitty gritty of stock, trading, and investments.

 So what are stocks exactly?

A stock is a portion of a company, and the persons who buy these shares or stocks are called shareholders. A group presents its shares for people to invest in them. A firm begins it’s dealing with its shares through an Initial Public Offering or an IPO. Any person can freely buy shares of a given company following its IPO. Stocks rise or fall in value as a corporation depending on a demand or supply trends. If the stock of a particular firm sells rapidly, its stock value increases. Conversely, if there is a diminishing market for these shares, their value will sink.

A company earns through its stock value and returns benefits  to its stock owners through dividends. These dividends may be capital or shares. A firm may opt to use stock-generated earnings to fuel its stocks. These are called growth stocks. If a corporation decides to distribute its profits to its shareholders, it is termed income stocks. A stock exchange is a medium by which traders invest shares from people. These tradings may be conducted by a trader personally or via an electronic portal. A person can place his or her bids on stock and hires the services of a trader to sell or buy these shares through a stock exchange.

A comprehensive listing of stock exchanges is available on Worldwide Stock Exchanges. The leading stock exchanges of the world include the New York Stock Exchange, London Stock Exchange, Bombay Stock Exchange, Frankfurt Stock Exchange and Nasdaq Stock Market. Firms that do not feature on this list are mentioned on the Pink Sheets or Over the Counter Bulletin Board indexing system.

A person with may choose to trade online, with the help of a broker. Things to look out for when selecting an efficient broker include-

·         Amount of money to be invested

·         Frequency of investments

·         Degree of market analysis needed

·         Diversity of trading services required

Trading sites require personal details and so the site must be verified for security issues. The Investing Online Resource Center is a valuable resource to check the reliability of an online trading firm. To begin trading online, it is essential to create an online account. This account assesses a person’s capability to deal with the capital he or she plans to invest, and several alternatives about the type of account to be opened will be offered by the site. These include individual or joint, custodial or retirement, and a cash or margin account.

As per governance laws, a minimum amount of half the money invested must be retained in the online trading account created. Sufficient equity percentage is essential in the account, adding up to 25 percent of any stocks bought. If this is not done, an equity call may result, where a trader may sell stocks in the account to bring the equity percentage to the minimum required level. The next step involves selling shares, based on their real-time value. These stocks may be sold at current prices (market order) or when stock prices attain a higher level (limit order).

Investment fraud is a threat to online trading. Several unscrupulous dealers engage in schemes such as pump-and-dump plans, fake initial public offerings, and non-existent stocks to deceive clients. In such a scenario, thorough market research is paramount, and the Electronic Data Gathering, Analysis and Retrieval system helps this process.


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