The share market has attracted people for more than a century because the shares are seen as one of the easiest way to make good money. However, there are very few people who actually have the right perspective about the shares and the share market. For most people, shares are nothing but tickers of the price going up, making you gain money, and down, making you lose money. But, that is not even half of the story.
As any experienced investor knows, the share market is a lot more than those tickers of prices. Stocks are live businesses in action and not just about changing quotes. In fact, thanks to the advancement of technology, the buying and selling of securities have turned out to be a highly efficient process. Most of the work is done by the vast network of computers and there is hardly any human interference. You can sell 20,000 shares as easily as you can sell 200 shares.
The basic ideas
You must have heard the term trading stocks quite frequently. However, do not be under the impression that you trade the stocks like you trade baseball cards. You will not get 100 Intels for 100 IBMs as it does not work like that. In the language of the share market (share market in Hindi isशेयरबाजार), trading refers to buying and selling. The fact that the financial markets are marvels of technological efficiency is effectively understood by the fact that the systems can hold over one billion shares worth of trading in a single day.
There is no denying the fact that investing is not just about the numbers. But, it is also important to have some idea about the numbers if you want to know what is going on with the stocks and the market. You will find the stock market quote in any daily newspaper and even in online sites. This is the fundamental collection of numbers which the providers bring up to date regularly.
In terms of selling and buying shares, the stock exchange acts almost like those flea markets, instead of places of absolute financial superiority. Thus, you need to have a thorough idea about bidding and asking prices. Unlike the other goods and services that you buy, in this case both the seller and the buyer sets the stock prices. The bid price is the price that the buyer states he will pay up for the stock. The asking price is the price that the seller quotes.
The stock prices
You must have heard about the influence of the earnings on the stock market, the credit card, or the economy. These factors are important things to consider in terms of price changes but these do not impact the prices directly. These factors end up changing the balance of the demand and supply in the market.
Successful investments in stocks is all about selling high by buying low. It also is the opposite of what some investors do. The investors do not really start by doing that, but more often than not, they use price movement as the only signal for buying or selling. Stocks that get a lot of press and go up recently, often draw in more buyers and drives the prices even higher.
Nowadays more number of investors are turning to online brokers for trading. This means that they need to know the exact kind of buying and selling order that they want to pursue. You can utilize a range of buying or selling orders for gaining control over transactions, rather than, relying on one market order. Some of these orders have the constraints of price, while some other have the problem of time.
The stop loss order
The stop loss order file of the broker comes in handy when the bottom of your preferred stock price plummets. This order is all about instructing the broker to sell after the price hits a particular point. The purpose of this provision is to offer you a way out before the prices fall any more. Trailing stops, another kind of stop loss order, also offers protection to the profit while letting you follow the rising prices of the stock.
The markets on offer
There are various markets where the shares are bought and sold. If your idea of the stock exchange is a room full of people wearing coats and suits and running around in utter chaos, then you are probably thinking of the New York Stock Exchange, located on the Wall Street. It is the oldest and major stock exchange in the United States of America.
There is also a renowned computer-based stock exchange that lets the sellers and buyers meet online, and, that is known as Nasdaq. The market maker is the human presence in this scenario, while the computers handle all the orders and trades. There are no physical trading floors in Nasdaq, as you will find in the New York Stock Exchange, and many other such places.
Lastly, if you are planning to venture into the share market, make sure that you do not fall into any investment scam and get conned out your earnings. Investment scams are of many types and forms, and thus, it is important for you to keep your eyes open. The crooks and cheats lure the investors with the opportunities of inside deal, and before you know it, your hard-earned money is all gone.