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