Stock Market made easy | What is Stock Market ? | Your Roadmap to Stock Market Success
Stock market basics explained, Stock markets made easy and answered basic questions like What is Stock Market, your journey to stock market investing success and more.
In this ever evolving world and historically high inflation, there is inevitable need that every individual must have fundamental financial knowledge as well as he should know how to save and invest his money wisely in-order to achieve his goals and achieve financial freedom.
In order to do you we are going to start from very basics of investing and explore various forms of investing, in this article we will discuss about Stock market, Its Importance and what is stock exchange, broker and many more.
Table of Contents
Understanding Stock market
Stock market on first note, seems to be a very complex and intimidating place, but Stock market is just a market place were buying and selling of asset take place. If you live in a country like USA, UK, or India you would have participated in an economy which heavily depends upon various forms or markets. For example :
A Fruit Market, this market deals with buying and selling of Fruits.
A Real Estate market – This market deals with buying and selling of properties, just like above examples,
A Stock Market – Stock market deals with buying and selling of Stocks of various companies.
But what exactly are Stock ? you would have heard that stocks are bought and sold in Stock market. In simple words, a stock represents partial ownership of a company.
For example, Company X has total 10 Shares, if the founder of the company has 10 shares, then he has 100% ownership of the company. However, if the founder sells 4 shares, then the buyer of these 4 shares will be 40% Owner of the company and Founder will be 60% owner of the company.
The individual who owns the shares of a company are commonly termed as Shareholders of the company.
Why Company Sell shares ?
Now the question arises, why will Founder ever sell their own share or ownership in the company ? We will now answer this question.
Imagine you are an owner of a successful Bakery, you are a very famous for bakery products in the town and always have high demand.
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You think about this and decide to capitalize these and expand your Bakery business in more towns .
To achieve your dream, you will have to buy more machines, hire more employees, do marketing campaigns etc. For doing all this, you will require a large amount of capital or cashflow for your bakery.
You have 2 options, 1 is a traditional method to approach to a bank. This means bank will charge you fixed amount of interest and you will be liable to pay that interest regularly. Also, Bank may deny your loan application.
In this case, you do have a second option available, that is you can Sell shares of your company. You can choose private sale, that is to sell shares to your family or friends who believe in your business or can go Public. Going public means, you are selling your shares to public who are invested in your business, and this transaction is known as Initial Public Offering or IPO.
We will cover IPO in detail in upcoming blog, so stay tuned
Why will You Buy Shares ?
You will decide buy shares of various companies as you think you have better opportunity to grow you wealth by investing you money in a stock then in other instruments.
An individual may not have time or talent to work in a sector and generate his own profits so he will invest in a company and will be a part owner of that company.
That company will use that capital to grow their business and generate profits, which in-turn will increase the share price and benefits its investors by stock appreciation.
What is STOCK Exchanges
Stock exchanges is like a central junction were buying and selling of stock takes place. You can think of them as a designated location for trading stocks. In your city you can see there are multiple fruit markets and you have an option to buy your fruits from any fruit stalls.
In similar manner we have multiple stock exchanges in a country and one can choose any stock exchange to buy and sell your stocks.
In USA, there are 2 most dominant stock exchanges. New York Stock Exchange ( NWSE ), founded in 1817 and other is NASDAQ founded in 1971. NASDAQ is dedicated for hosting of large tech corporations like Google, Apple, Amazon, and Intel etc.
Who are STOCK Brokers
Stock brokers do play a very important role in stock market ecosystem. Stock brokers acts as an intermediary in purchasing and selling of stock on your behalf. Before technological boom, in 1990s Broker used to physically assemble on trading floors at stock exchanges and search for buyers and sellers for their client’s order.
However due to advancement in technology, old process is abolished and now we can see w can buy and sell tocks with click of a button on you phones without any delay.
Thank you for Reading our article, we hope this helped you to know the basics of stock market and we helped you gain knowledge.
In our Upcoming Article, we will post about below topics so ensure to follow us.
- What is IPO?
- How Stock trading works?
- Types of Order in Stock market?
FAQ
Q What is stock market crash?
A: A stock market crash is a violent drop in stock prices all over the market and cause panic situation in investors. This is best time to invest in Stock Market.
Q Is Stock market closed today ?
Q: US Stock market Holidays in 2023 ?
A: Below is a list of US Market Holidays.
| Holiday | 2023 |
| New Years Day | 02-Jan |
| Martin Luther Day | 16-Jan |
| Washington’s Birthday | 20-Feb |
| Good Friday | 07-Apr |
| Memorial Day | 29-May |
| Juneteenth | 19-Jun |
| Independence Day | 04-Jul |
| Labor Day | 04-Sep |
| Thanksgiving Day | 23-Nov |
| Christmas Day | 25-Dec |
All the timings mentioned are in Eastern Standard Time (EST).
