What is a stock market ?
Stock markets are the central authority for the exchange of any company's share.
It is a place where the exchange of a company's share takes place, as it allows organizations to make themselves go public to raise funds from common people.
How does stock markets work
Suppose a company ABC Ltd. wants to raise funds to grow its business, company's founders put their money to grow the business but if that money is not enough to meet business requirements then ABC Ltd will go public through a stock exchange, first of all, many paper formalities have been done to make the company public.
Once ABC Ltd is public then common people can also put their money into the business of ABC Ltd and in exchange for money, they will get a stake in ABC Ltd. according to their investments.
After the buyer places an order to buy a stock through a stock broker. If any seller is ready to sell that stock, only then the buyer will able to buy that stock.
In buying and selling of stocks, there are some processes that take place.
First, the buyer places a buy order and the seller places a sell order, both of them places an order through a stock broker
The seller sells the stock through a broker then the shares go to the exchange and the buyer buys stock through a broker from the exchange.
Seller --- Exchange --- Buyer
Every country has its own stock markets in which shares of their companies are traded.
There are many stock exchanges in the world but there are some most famous stock markets are -
1. Bombay Stock Exchange (BSE) India
2. National Stock Exchange (NSE) India
3.New York Stock Exchange (NYSE) US
4. National Association of Securities Dealers Automated Quotations (NASDAQ) US
5.Shanghai Stock Exchange (China)
6.London Stock Exchange (England)
7.Hong Kong Stock Exchange (Hong Kong)
8.Tokyo Stock Exchange (Japan)
There are many types of trading and investment options in the stock market -
1. Intraday Trading
2. Options Trading
3. Features Trading
4. Swing Trading
5.Systematic Investment Plans - Mutual Funds (SIP)
6. Equity Market Investing
In India, there are mainly two indexes in which investors invest funds -
There are some types of investors in stock markets such as -
1. Retail Investors - common public with very small capital
2. High Networth Individuals (HNI's) - Individuals with very big capital
3. Institutional Investors - These are institutions with very large capital to invest
4. Foreign Institutional Investors - These are foreign institutions
What do you think about stock markets ? Tell us in the comments section……