Basics of Stock Market

Charley Boorman The One Thing Paris

Admin — Tue, 29 Jun 2010 18:03:24 +0000

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The Three Major US Stock Exchanges

Admin — Sat, 09 Jan 2010 15:12:41 +0000

The New York Stock Exchange (NYSE) was the first official stock exchange to have been established in the United States. After the formation of the New York Stock Exchange (NYSE) in 1792, there were a number of traders who were not allowed to trade on the New York Stock Exchange as they were considered not to be ‘good enough’.

These traders who could not make it on the New York Stock Exchange started trading on the street curb and later become dubbed the ‘Curbside Traders’. Over years these traders started moving indoors and started the American Stock Exchange (AMEX).

In 1971 the United States saw the establishment of the first electronic stock exchange, the National Association of Securities Dealers Automated Quotation System (Nasdaq).

These are the three major stock exchanges in the United States and they are in direct competition with one another. Competition, on the other hand is good as it ensure that orders are filled faster and more cheaply for traders.

The US also consists of smaller stock exchanges, such as the Boston Stock Exchange, Cincinnati Stock Exchange, Pacific Stock Exchange and the Philadelphia Stock Exchange, which is the US’s oldest organized stock exchange.

The Different Types of Investors in Stock Markets

Admin — Wed, 30 Dec 2009 15:26:26 +0000

In short, there are three different types of investors or traders on stock markets. This article will look at the three different types and will act as a guide for the reader to determine in which category he or she will resort.

Individual Investors

Individual investors generally invest in stock of corporations they know and believe in. The intention of these investors generally is to hold on to these stocks for long periods of time, generally a year and longer. These investors ignore the short-term and day-to-day price fluctuations and believe that the value of the shares will increase over long periods of time.

One such known investor is Warren Buffet, co-founder of Microsoft, who believes in buying shares and holding onto them, never selling it. He became a billionaire due to this ‘buy and hold’ strategy.

Short-Term Traders

The short-term trader generally has no interest in the long-term prospects of a corporation and the intention is to make money from short-term movements in the stock markets. These traders will generally buy a stock and sell it within minutes, hours or days in order to generate profit from short-term increases in the price of the stock.

One such trader is the well-known ‘Day Trader’, where the trader will buy a stock at $5. The trader will attempt to sell the stock at $5.10 or even $5.50 the same day as the price increase. Where the price decrease the trader will attempt to sell the stock and suffer a small loss as apposed to hanging on to it. By the end of the day all trades will have been converted to hard cash.

Professional Traders

Professional traders are generally investing the funds of other people on stock markets. These traders act on instructions from clients and they are more known as brokers.

These traders often include individuals employed by Wall Street brokerages and stock exchanges, but they also include institutional traders such as pension funds, banks and mutual fund companies.

Joining a Stock Exchange

Admin — Fri, 18 Dec 2009 15:25:36 +0000

Corporations interested in joining a stock exchange may find that it is not an easy process. The main reason for this is the fact that every stock exchange has its own rules and regulations to which a company has to adhere before joining the stock exchange. In some instances it may take a corporation a number of years before all the requirements of a stock exchange are met.

It is a known fact that stock exchanges list corporations that conform to the vision, mission and philosophy of the particular stock exchange they are interested in joining.

As example, one will find that the New York Stock Exchange list some of the world’s largest and well-known corporations, such as Coca-Cola, Wal-Mart, Johnson & Johnson, etc., while Nasdaq mainly list large technology related corporations, such as Cisco Systems, Intel and Sun Microsystems. In addition to this, the Nasdaq also list ‘Over the Counter’ stocks.

There are currently in excess of 5000 stocks traded on the main three US stock exchanges and another 5000 smaller companies traded over the counter.

Introducing the Stock Market

Admin — Mon, 07 Dec 2009 15:25:02 +0000

Surprisingly the stock market is not as difficult or complicated as many people may imagine it to be. In order to introduce a person to stock markets, one should imagine the stock market as a huge auction where people buy and sell paper called stock.The stock market consists of three main role-players: large corporations, traders and brokers.

Large Corporations

Companies may at some time look for avenues to raise capital, whether this is for buying properties, buying equipment or hiring new employees. The stock market is a convenient place where corporations can raise these required funds by issuing shares stock in the company.

Traders

Traders are normal individuals, like you and me, who are interested in buying stock and later selling them with the aim of making profit from the trade. The stock market again is the location where buyers and sellers meet in conducting their trades.

Brokers

Not all individuals are in a position to attend stock markets in person on a daily basis. Brokers are individuals or companies who offer their services to these individuals and will buy and sell stock on behalf of their clients.

As can be seen from the above introduction, the stock market appears to be a central location from where companies, traders and brokers all benefit in issuing, buying and selling of shares stock.

What is a Stock Certificate?

Admin — Mon, 30 Nov 2009 15:24:23 +0000

In short, a stock certificate is written proof that an investor has invested in the company when a share of stock was acquired. Many people are under the wrong impression that traders invest in stock. In fact, all traders invest in companies. Traders may ask for stock certificates to be issued to them directly. It will then be the responsibility of the trader to safeguard the certificate personally. In the majority of instances traders may request and entrust a brokerage firm in safeguarding the stock certificate on their behalf. As a note of interest, there are two types of stock, common and preferred. Common stock is the only type that most corporations issue to investors. Not all companies issue stock. In order for a company to be listed on a stock exchange and issue shares of stock, the company needs to be a Corporation and comply to all rules, terms and conditions of the stock exchange they are listed on before they can issue shares to investors.