What is the Stock Market?
-
Mean of share-
Share means a share or part of a company. The total ownership of a company is divided into millions of pieces. Every piece of ownership is a share. The more such pieces, that is, the more shares he has, the higher his stake in the company will be. People can also buy or sell this stake. For this, there are separate stock exchanges.
Stock Market-
The stock market is also called the share market. It is a market that is a collection of many markets and exchanges where shares are regularly bought and sold by the people. Here only the shares of those companies are bought and sold which are listed in the share market.
- The stock market is a marketplace for buying and selling company shares. In the stock market, buyers and sellers meet and negotiate like they do in any other market. Previously, shares were purchased and sold solely by spoken bids, with buyers and sellers engaging in exclusively verbal transactions. All of these transactions are now carried out through computers linked to the stock market network. This service is also accessible via the Internet. Currently, the buyers and sellers do not even know each other.
- Direct buying and selling had to be done on the Bombay Stock Exchange till a few years ago. Anyone sitting at home has been able to buy and sell stocks online for the past few years thanks to computers and the internet. This is a great instance of the information revolution in action. Work that formerly could only be done by wealthy people is now available to everyone.
- These shares are sold to the highest bidder if someone has to sell. If someone wants to buy a share, they can do so from a seller who is willing to sell at the lowest price. All of the facilities required to lodge such bids are available at stock exchanges such as the Bombay Stock Exchange and the National Stock Exchange. Consider how many shares are traded in a single day. How difficult would it be if every businessperson was yelled at? Buyers and sellers must be located by yelling. If this occurs, buying and selling stocks will become nearly difficult. The internet, stockbrokers, and other online resources supply this basic structure. In essence, the stock market is just a very convenient vegetable market.
- Stock markets are an integral aspect of any modern country’s economy. The stock market is essential for the development of a country’s industries, just as roads, rail transportation, electricity, and water are essential for the development of a village or city. Industries require capital to operate. They obtain it from the stock exchange. Every regular guy can engage in the largest industry through the stock market. With such engagement, he can gain an equal portion of major industry earnings. If a citizen believes that Reliance or Infosys will generate significant profits in the future, he can participate in this profit by purchasing shares so, the stock market’s system is required. A good stock market ensures that all investors have an equal chance. Nowadays many banks like ICICI, HDFC, State Bank of India, Axis Bank, etc. provide Demat service. The annual fee for this type of account ranges from Rs 500-800.
Types of stock market
The primary market and the secondary market are the two types of stock exchanges.
1. Primary Market-
The primary market is where companies first list on the stock exchange and issue their shares. Companies strive to raise funds by issuing their shares in the stock market for the first time through an IPO (Initial Public Offering).
2. Secondary Market-
The exchange-traded market is another name for the secondary market. This is a normal market where company shares are exchanged regularly. A stockbroker helps investors execute their trading orders on the stock exchange.
Stock Market Trading-
Trading is the short-term purchasing and selling of stocks, whereas investing is the long-term purchase of stocks. A trader typically seeks to earn quick money, whereas an investor seeks to purchase a good stock on the stock market and waits for its price to rise. A trading account allows you to buy and sell stocks. A Demat account is used to keep shares safe. Money is debited from your trading account and credited to your Demat account when you buy shares through your trading account. When you sell your stock, the opposite occurs.
Types of trading-
1. Swing Trading-
You can purchase and sell in this trading. If you are losing money on the day you acquired, you can extend your holding period by not selling the stock on that day. Then, when profit arrives, you can sell to profit.
2. Day Trading-
The trader must sell the stock on the same day that he purchased it. That stock can be held for a long period. Before the market closes, the trader must sell the shares. Traders can profit from the ups and downs in the stock at tiny intervals in this manner.
3. Momentum Trading-
When a stock appears to be rising, the trader will apply this strategy. He then buys and sells the stock as soon as someone reports bad news about it. As a result, traders make a lot of money quickly. However, staying informed about current events is critical. A lot of money might be lost if the stock is not sold at the correct time.
4. Position Trading-
In this type of trading, you can trade for a few days. This trading is for those people who do not come to the market regularly. After a few days, you should sell it as soon as you make a profit. Position trading describes this type of trader.
4. Scalping Trading-
Day trading and scalping are two types of day trading. This trading involves buying and selling, but it can take place at any time of day. Depending on the type of trend you’ve followed, you can make money or lose money.
Difference between Investment and Trading-
| Investing | Trading |
| 1. Investing is a long-term commitment. | 1. Trading is only a short-term commitment. |
| 2. In investing, fundamental analysis is used. | 2. Technical analysis is used in this case. |
| 3. It takes a long time to earn money. | 3. Trading allows you to make a lot of money in a short period of time. |
| 4. In investing, the broker’s fee is minimal. | 4. The trading commission charged by the broker is extremely expensive. |
| 5. You may invest smartly in investing. | 5. Trading is similar to gambling in that there is no time to ponder or comprehend. |