In this chapter, we will take a look at a few of the most basic concepts that are relevant to the stock market. We offer the best stock alert service that can provide you Profitable Trading Strategies.
Basic Terminologies
· Stocks: Stocks are stocks of companies that are sold in the stock exchange. These shares aid someone own a part of the company. Stocks would be the most preferred stock market investment option.
· Exchange-Traded Funds (ETFs): ETFs are like mutual funds but are traded in the stock exchange. They're similar to regular stocks but with the benefits of a mutual fund.
· Precious Metals: Precious metals can also be traded at the stock market. These include: silver, gold, platinum, etc.. These are traded daily like stocks.
· Commodities: Commodities are all the products and items traded in the stock market. There are many types of products -- such as energy and livestock -- that are traded at the stock market.
· Foreign Exchange: Foreign exchange identifies foreign currency that's traded at the stock market. All these are foreign currencies which are traded daily.
What can it be?
The stock exchange is a physical marketplace where businesses list their stocks. These stocks are bought and sold daily. Apart from company stocks, other financial securities like bonds, ETFs, commodities and precious metals can also be traded in the market. There's a separate market for each and you'll be able to trade in all of them or some of them based on your needs.
There are two different types of markets: the physical marketplace and the digital sector. The physical market is where agents trade in stocks on the floor of the marketplace. Here many multi-national companies from all over the world list their stocks for folks to buy and sell. Should you wish to trade here then you have to be a member of the stock exchange.
The other type of stock market is known as the digital sector. These digital markets are online markets you can trade in by making an account. There are no brokers here and you may purchase and sell by interacting with other members of this stock market. The most well-known online stock exchange is NASDAQ. It is possible to choose to trade in either or both niches.
Fundamental Components
Stock Market
As discussed above, the stock exchange is a place in which you buy and sell financial instruments. It's a market place where sellers and buyers meet to fulfill their investment needs. It can be a physical or a virtual market. There are lots of stock markets all over the world that are interlinked since they share common stocks.
Brokerage Firms
As was mentioned earlier, a person has to be a member of the stock market if they want to buy and sell stocks. But, it is hard to be a part, and you need to pay a lot of money to achieve that. Instead, you can sign up using a brokerage company and trade in the market. There are numerous companies to pick from, and that means you have to search for one that is well respected and matches your requirements.
Brokers
Agents are utilized with brokerage firms and can help you buy and sell stocks. There are two types of agents: full time brokers and part time brokers. Part time brokers will merely buy and sell your stocks and will not assist you in the decision-making process. You have to pick a broker based on your requirements.
Demat Account
The demat accounts is exactly what you will have to trade with from the stock exchange. This account is not like your usual bank account. There has been a time when it required people several days to buy and sell shares. Now, however, it requires just a few seconds to do so. This is only possible if you've got a demat account.
Intraday Trading
Intraday trading refers to trading at the stock exchange. You can buy and sell stocks every day. This is a sophisticated kind of trading and you must take this up only after studying the stock market for a while. The risk and reward are quite high in this form of trading, and you can earn a daily income from it.
Short-Term Trading
Forex, as the name implies, describes trading for a period of less than 6 months. It involves purchasing and holding a financial instrument for less than 6 months and then disposing of it. Short-term trading is much like intra-day trading, since the time period varies between a week and 6 weeks.
Long-Term Trading
Long-term trading describes holding a stock for quite a while. This time will vary from instrument to instrument. This is reportedly a secure option and will provide you consistent yields provided you invest in the best stocks and other instruments.
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