What is Stock trading
Are you interested in stock trading? But, are you confused with the trade graphs going up and down? The graphs of the stocks are always confusing. Yes, it does feel chaotic but when understood it’s all easy. Trading nowadays is as easy as ordering your favourite food online. Yes, It’s that easy. All you need is a broadband, subscription account and a bank account.
what actually is stock trading?
Keeping it simple, when a company shares are displayed on the paper, this enables the investors to sell their shares with other investors. The place where these buyers and sellers meet to sell their shares is known as a Stock market. But now, in this digital era, as everything has become digitalized, most of the stock selling is done online. This online trading consists of a series of computers that record the trades in an electronic mode. This type of trading enable easy access to information and allows to deeply understand the flaws and correct them.
The stock markets are known to be a secondary market. Here, the owners can negotiate with active buyers. You need to make yourself clear that the companies listed in the market do not buy and sell their own shares. Make yourself clear that the stocks you are purchasing are from a shareholder not from the company.
The modern stock trading has lead to professionalism alluring the buyers and sellers to trust the transactions are fairly built on trust and in a cost-effective way in a certain period of time. Online trading is now the modern stocking which stores the information electronically and has led to efficient trading.
There are also loose exchanges called Over the counter exchanges called bulletin boards ( both in combination abbreviated as OTCBB). This is one of the risky tradings as the companies fail to occupy a place in the stock listings with the bigger exchange. Only large companies with experience in stock trading will be on the list.
In a few developed countries, stock trading is a self-regulatory service which comes under a non-governmental organization with their own standards and rules. Some stock markets seek professionalism in order to have a rapport with a buyer or a seller to sell their offers. These professional marketers are known as Market Makers. The market consists of bids and offers. The difference in the price between the bid and the offers is the Spread. The larger the spread the larger will be the liquidity. The more the number of buyers and sellers the more will be the depth of the market.
The investors always focus on the indices which aggregate the price of each different stock.
How are the stocks traded?
Almost all the stocks are done based on the New York Stock Exchange (NYSE). The stock exchanges are under the control of government agencies which prevents the investors from financial fraud and smooth stocking.
As earlier said not all the stocks are exchanged few are exchanged over the counter. But the exchange trading is more liquid compared to the over counter exchange.
How do you analyze the stocks?
A stock analyst will seive a lot of factors thoroughly to predict the future of stock marketing. A stock marketing or market cap is the total amount of shares. The market capitalization is usually indicated by a company’s financial status.
The publicly traded stocks are required to submit the reports. The reports are scrutinized quarterly and annually. The marketing analysts keenly observe the reports and see the performance of the company. Earning per share (EPS) displays the company’s profits divided by the overall shares. Analysts also focus on many other factors like the price to earnings ratios, Return on equity, profit margin, etc.
This is all the info on the stock trading. Nothing seems easy in the start but the end is always worth the difficulties faced. Next time you trade, do check out this info on stock trading. When done in the right way stock trading is rewarding. Stock trading is worth a try as it is long term wealth creation process and online trading has made everything easy. All it takes is a little time to cope up with your skills.