Business
A beginners guide to the stock market for educators
By Aaron Crotty
sold. This effectively means that shares are priced by the collective will and attitudes of the market, comprised of all the traders and investment houses that actively trade in those securities.
In essence, that ' s the foundation of what a stock market is, and it ' s by no means a comprehensive study. Getting to know the markets requires lengthy research and an understanding of business, economics, law and politics. For those that do get to grips with how the markets operate, the allure of trading profits, is sufficient rewards for all their hard work.
Definitions you should be familiar with:
Bearer stocks: This is the stock that is unregistered with the owner’ s name.
Bid price: This term indicates the sale price of stocks or shares.
Some people really get confused between‘ stock market’ and‘ financial markets’, as they are not completely the same. In simple words, a stock market is a place where stocks, bonds, options, futures, and commodities are traded. Buyers and sellers exchange trade together via a platform provided by a stock exchange. Trades are done during specific hours on business days Monday-Friday. Unfortunately, the answer to this simple question of how to invest in the stock market is rather complicated, and cannot readily be summed up in one sentence. In this article, we are going to attempt to clear up the ambiguity, and offer a direct and succinct answer to this most foundational of trading questions.
What is a stock market?
The stock market is an everyday term that we use to talk about a place where stocks are " traded " – meaning bought and sold. For many people, that is the first thing that comes to mind for investing. The goal is to buy the stock, hold it for a time, and then sell the stock for more than you paid for it.
How long do you hang on to stock? Ideally, investors who hold stock for
10 years or more usually succeed in the market. Stocks are longterm investments, but there are no guarantees.
What are stocks?
Stocks are units of ownership in a company. Companies sell stock to raise money, which in term can be used to increase the revenue and growth of the business.
When you buy stock, you become a shareholder, which means you now own a " part " of the company. If the company ' s profits go up, so will your‘ share’ in those profits. If the company ' s profits fall, so does the price of your stock. If you sold your stock when the price of that stock falls below the price you paid for it, you would lose money.
Stock prices can rise and fall.
In the stock market, prices rise and fall every day. When you invest in the stock market, you are hoping that over the years, the stock will become much more valuable than the price you paid for it. The price of a share at any given stage is dictated by supply and demand within the market. It rises or falls every time a share is bought or
Blue chip: These are shares of big and reputed companies.
Dealing: This is the purchase and sale of shares.
Dividend: The part of the company’ s profits which is usually distributed to company’ s shareholders, normally on a regular basis.
Equities: These are the ordinary shares. They are different from debenture and also from loan stock.
Futures: Contracts that allow any holder the legal right to buy or sell Indexes and Commodities in the future at a price set today.
Options: Term means the right to purchase( call option) and sell( put option) a particular share at a particular price within a particular period.
Portfolio: A selection of shares usually held by a person or fund, also known as investment portfolio.
Yield: The gross dividend presented as the percentage of the share price.
To connect with Aaron, email him @ aaron. crotty @ arloassociates. com
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After The Bell Mar- Apr 2017