Understand how stock market works


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These days, maximum people invest their money in stock market but only a few people know how stock market works. http://www.howstockmarketworks.com.au

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Understand how stock market works

  1. 1. Understand how stock market worksThese days, maximum people invest their money in stock market but only a few people knowhow stock market works . We often hear in news that Dow Jones in 50 points up today, NASDAQis 20 points down today. Have you ever thought that what stock exchange is, who runs it? Haveyou ever seen an auction? If you have seen then you can understand share’s movement verywell. Like these, there are so many queries about stock market. Without knowing everythingabout stock market, never invest in it.Every stock moves on behalf of its index. Now you should come to know what index is. An index(NYSE, Dow Jones, NSE, BSE, NASDAQ, S&P 500) is made up of some company’s shares. DowJones’s index is made up of 30 company’s shares. S&P 500 is made up of 500 company’s shares.If Dow Jones is 50 points up, that means the average value of those 30 companies is up and vice-versa. There are two types of stock exchanges. 1. Physical Stock Exchange 2. Virtual StockExchange. 1. Physical Stock Exchange: - It is the place where shares are traded physically. Traders even out-shout each other while trading. These persons are called floor brokers. Thousands of shares are traded daily. NYSE is an example of Physical Stock Exchange. 2. Virtual Stock Exchange: - It is the place where shares are traded electronically. You cannot buy or sell shares directly even online in stock market. For trading, you need the services of broker. NASDAQ is an example of Virtual Stock Exchange.After learning about exchanges, now you have to learn how share prices move. The movementof share price depends upon supply and demand policy. This supply and demand policy furtherdepends upon other factors like financial prospect of the company and many more. When themarket is going up and the transactions is up it means market is profitable and if market is downand stock is also going down the chances of profit are less. In negative market, either only shortsellers can gain profits or normal investors just hold their shares. This is the way to stay in stockmarket. For getting profits in stock market, you just have to focus on How stock market works.http://www.howstockmarketworks.com.au