Would you like to invest in the stock market? If you’ve never done it before, learning how everything works can be quite overwhelming. Investments are not something to be treated lightly, which is why the best place to go to for advice is to experts that know every single detail about the stock market and are willing to share it with you. Today, we’ve gathered the input of 3 experts regarding how the stock market works and what you should know about investing in it.
How the Stock Market Works: 3 Expert Explanations
1. What Is a Stock?
Perhaps the most important thing to know when it comes to learning how the stock market works is what a stock is. Cory Mitchell, proprietary trader and financial writer, clears that up for us. He explains that a stock is like a small piece of a company. Thus, whenever you buy one, it’s like you’ve just bought a piece of that company.
The moment a certain company feels like it’s time to raise some money, it issues what some people call stocks and others shares. These shares (or stocks) are issued through an initial public offering. In this stage, the price of the shares will depend on two main things: how many of them are being issued and how much the company is worth. The money the company raises is used for business growth. Then, what happens with the shares? Well, traders and investors keep on trading them on an exchange. At this point, the company no longer has any interest in them, since it doesn’t get any more money from them.
2. What Are Stock Tickers?
Writer and financial expert Amelia Josephson explains the concept of stock ticker in a clear and easy-to-understand way. She says that a stock ticker is that place where you can check the trading volume and the price of different stocks. Every day has a few so-called trading hours. During these trading hours, the stock ticker is updated. It shows any changes in trading volume and stock prices in different companies. The trick to recognizing the company you have an interest in is knowing its symbol. After the symbol, the stock ticker shows you the shares trading and their price. You also have the possibility of knowing whether the price is higher or lower than the previous day. All you have to do is check whether there’s a green (higher) or red (lower) arrow on the stock ticker. The difference between the two prices will also be shown.
3. What Is the Role of Stock Brokers?
Whether you want to be a broker yourself, or you just want to know what exactly a broker does, CEO of Mitra Robot (a company that manufactures robots for the banking industry), Balaji Viswanathan explains that a broker’s job is to check the companies that want to enter the stock market and approve or decline their request. Moreover, a broker also connects sellers and buyers. That’s because due to the large number of people who invest in the stock market, it would be impossible for everyone to get in touch with each other without the help of a broker.
We hope today’s brief article has managed to teach you more about the stock market and inspire you to get in the game yourself. For a more detailed explanation of how the stock market works, we advise you to watch the clip below.
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