In today’s article lets understand what is a stock market and how does it work, this can be a beginners guide 🙂
But before we talk about Stock Market Per se lets try and understand what is a “Stock”?
In simple language a stock or a common stock which can be also referred as shares that represents a fraction of ownership. A stock is an asset that may appreciate in value giving you profits if sold at higher prices, however price of a stock may fall as well resulting in a loss.
What Is A Stock Market?
If you have understood what a Stock means then I am sure you will be able to get this one, “A Stock Market is a place where you can buy and sell the shares of the companies which are listed on the exchanges” I hope that was simple.
How Does The Stock Market Work?
- Again to keep it simple Stock Market lets buyers and sellers to negotiate prices and execute trades.
- The Stock Market works through a network of exchanges as in Dubai we have Dubai Financial Market – DFM and in Abu Dhabi we have Abu Dhabi Securities Exchange – ADX
- Companies list shares/stock on a exchange through a process its called Initial Public Offering – IPO
- Investors may purchase those shares, which allow the company to raise money to grow its business.
- The exchange tracks the supply and demand of each listed stock/s
Who Are The Market Participants
Participants in the stock market range from small individual stock investors or Big investors. Individual stock investors are called retail investors & Big investors are called Institutions, corporations or High Net Worth Investors I personally call them SMART MONEY.
Who Decides The Price Of Stock?
A little economics here, the price of a stock is decided based on Supply & Demand of a particular stock at a particular time. Buyers are the one who want to buy a stock at a particular price – BID and sellers who want to sell a stock at a particular price – OFFER
- When Bid price and Offer price is matched a trade is executed on a first come first served basis.
- Market is very emotional – Fear & Greed
What Is Volatility?
In simple terms – Big moves to up and to the down side in a very short period of time.
Key Points
- Never invest in any stock/financial markets without investing in “yourself” first. Learn to Earn click here to learn how to be a profitable trader/investor.
- Stock Market is a place where money goes from impatient to patient, if you understood share your thoughts in comment section please I would be glad to read your answers.
- Stock is a general term, in other words it is used to describe you ownership in a particular company that is listed in a stock exchange.
- It is the best time to invest in UAE Stock Markets, #investindubai #investinuae
I hope this article help you a bit to understand a little about stock market. Let me know in the comment section below which other topic you would like to read.