We define Stock market as a place where stocks, shares or derivatives of a company are bought or sold. In other words Stock market refers to a place where trading of certain stocks of a company takes place at an agreed price. Sometimes the stocks are also referred to as equities therefore this market is also known as equity market.
Stocks or Share?
Stocks and Share are used interchangeably but both the terms are different in some context. Stocks refer to the ownership certificate of any company, in general, and shares means the ownerships certificate of a particular company. Having shares of a company means having partial ownership of that particular company. Some facts about stocks are-
• Owning shares of a company makes you the partial owner of the company and you gets the voting rights in that company issues
• Stocks do not offer any guarantee of returns.
• Stocks can generate revenue through dividend even if the price of that stock gets down. That means if a company offers dividend on a share, you get the guaranteed return on that share
How Trading Takes place in Stock market.
Trading takes place in Stock Exchange and carried out by licensed members called brokers. To trade in stock market first you need to have a Demat (Dematerialized) account then you should approach a broker. The brokers can give authority (on certain criteria) to transmit the orders of trading to their sub-brokers, so you can also contact to a sub- broker rather than a exchange broker because a broker generally do not entertain small investors and deals with big investors or FII's.
A stock market gives you an opportunity to make money by buying or selling the shares of a company. Once you are authorized to trade in stock market, you can trade upon the stocks. Trading process in stock market takes place when there stands a person who wishes to sell his stocks and the other is ready to buy them. Thus the stock exchange acts as an intermediate between the buyer and the seller and they agree to deal on the stock price at the particular time.
In beginning, most exchanges used to have traditional methods for trading where traders were wildly throwing their arm up, waving, signaling to each other to carry out a trade but now a days the exchange is composed of a network of computers and modern information technology where trading is done electronically.
A stock market is nothing but a link between the buyers and the sellers. Stock prices change everyday due to change in supply and demand. If more people demand to buy a stock than sell it, then the price moves up and vice-versa.READ MORE
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