Wednesday, 14 May 2014

Learn About Stock Exchanges and About Online Stock Trading

Stock Market and Online Stock Trading

In every modern society stock market is an integral part of the business news every day. Business groups and even governments use the stock market to create capital.  The stocks or shares are like little pieces of ownership of the company and the value of these stocks is depending on the performance of the company. 

A stock exchange does not own shares, but it act as an intermediate platform where buyers and sellers meet for trading.  The main function of an exchange is to provide liquidity.  Most of the shares trade through more than one stock exchange. 

New York Stock Exchange (NYSE), American Stock Exchange (AMEX) and Nasdaq are the main stock exchanges in America.  Though the trading of the stocks is doing through brokers, a good knowledge about the stock exchange will help you to understand the techniques of stock trading or investing in stocks.

Watch video below by Kurzgesagt  about How the Stock Exchange Works:

The NYSE and AMEX are mainly auctioning based exchanges and here the brokers or their representatives physically come to the trading floors and participate in verbal auction for stocks.  Nasdaq is an electronic exchange where buyers and sellers are doing their trading by computers using internet network.  More companies are listed in Nasdaq and number of trades in shares are also higher in Nadsaq than NYSE.  

AMEX is a smaller exchange and it has the second largest options trading market. Listing on the NYSE affords companies great credibility because they must meet initial listing requirements.  Nasdaq has a separate section for companies with small capital. Investors who are interested in smaller companies can trade through this exchange.  

When a company offers its stock to public, it is called IPO or initial price offerings.  Stocks first become available on an exchange after a company conducts its IPO.  After this initial procedure of listing, if the company continues to do well in their business, the stock price will go up and the demand for its stocks will also go up.  After the IPO, the ownership of shares will hand over to the public (shareholders) and these shares can be sold and purchased in an exchange (secondary market).

When a company performs badly after the IPO, the share holders will begin to sell the stock and this will make the stock price to go down.  The performance of the companies is assessed by their monthly earning reports.  According to these reports, the stock price and the demand will go up or go down periodically.  When a company’s performance is good and if it shows the upward progress steadily, that stock is referred as ‘blue chip’ stocks or most reliable stocks.

In stock exchanges, it isn’t just stock that is traded but bonds, securities and commodities are also traded creating wealth in many different sectors.  The role of stock exchanges in the economy of any country is very important.

Online stock trading is a way to make small or large amount of money as per your interest.  If you are wise enough to do the online trading of the stocks successfully, you can make huge amount of money from this business.  But if you are not capable enough to understand the basics of this business, it is easy to lose money also.  So to become a successful online trader and to make money, seek help of a professional company, who has enough experience and expertness to lead y0u into success.

Click here to learn more about getting real time tips for successful online stock trading.

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1 comment:

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