What Is The Stock Market

Many people ask what is the stock market. Well it is a valid question the stock market is just a huge marketplace where stocks (an ownership interest in a company) are traded by vendors.

It is a place where prices are determined by supply and demand dependant on what price parties are willing to buy and sell at. If demand for a stock goes up then the price will rise and conversely price falls when demand goes down.

Price usually goes up when a company is performing well or announces profits in its quarterly reports.

Too many when they visualize the stock market they think about what they see on film with 100’s of people mostly men all packed in a very small area shouting and screaming trying to trade and sell “stocks”.

When you watch Bloomberg all you see is a bunch of letter and numbers scrolling across your TV screen.

Not Many People Really Understand The Stock Market

The stock market appears daunting to a beginner but it really should not be. It is like betting on “The Derby” when you have to pick a horse from the form card. You just have to know how to read the information and use that to make an educated decision. It as easy as traded baseball cards in theory. Millions of people do it every day without leaving their own home.

So What Is Stock?

Stock is simply ownership of a company. At the point you buy a share you become a partner in the company. For example lets us say a company (let’s call it Challenger Inc.) has 1000 shares of stock in total available. In the real world when a company goes public on the stock exchange the number of shares can be in the millions.

One of the best ways to invest in the stock market is options trading.

Now say we buy 100 shares of Challenger Inc. we would own 10% of the company. If Challenger Inc. performs well and has a good year then the price of the stock will go up. At that point we could sell our shares of Challenger Inc. and make a profit.

What Do The Numbers Mean That Go Across The Screen On Bloomberg

When you see those letters and numbers flashing across the bottom of the screen at 100 miles per hour they are merely the abbreviation for each company for example AAPL is Apple Computer or MSFT is Microsoft. Then the number next to this is the price. So if you see MSFT 106.23 what this means is that Microsoft is trading at $106.23 per share.

So to get more information why not get a beginners guide to investing in shares.