The Stock Market a Simple Guide

So what is the Stock market? It is a place to buy and sell stock and shares. The stock market manages the trading of securities giving business access to investors and their capitol. It is a major contributor to the market economy. With 3 main stock markets in the USA investors are able to risk there capitol and invest in business planning to make profits based on a forecast of the businesses future performance.

The NASDAQ stock market, which was created in 1971, was the first electronic stock market in the world. NASDAQ stands for, National Association Of Security Dealers Automated Quotation and is located through a telecommunications network. In other words there is not an actual physical place where you are able to see NASDAQ because it's connected electronically to the companies it represents.

The NYSE stock market, which stands for New York Stock Exchange, is a corporation operated by a board of directors. The board of directors is responsible for listing securities along with setting policies and supervising their members' activities. The NYSE uses floor traders; people that is, to make trades unlike other stock exchanges that typically use computers to make their trade transactions.

Last but not least is the AMEX Stock Market also known as the American stock exchange. The AMEX exchange processes around 10% of the total securities traded in the USA making it the 3rd largest.

The stock market also issues and trades stocks and shares through OTC, over the counter markets, also known as the equity market. The OTC markets most commonly list small companies and their stocks. Companies that have been dropped by the NASDAQ stock market due to instability within the company and their stocks can often be found at the OTC markets. There are two OTC markets; the first is the OTCBB, which stands for Over The Counter Bulletin Board and Pink Sheets.

The stock market allows investors to buy and sell ownership shares of publicly traded companies. You can make money within the stock market in two different ways. The first is through capital gains and the second is through dividends.

When a company increases its capitol assists this intern produces a capitol gain. This increase will drive up the value of the company's shares. An investor makes money on the difference between the price they paid and the increased value of the share.

A dividend is a payment of part of the company's profits; this is decided on by the board of directors. The set the level of divided to be paid out per share; the more shares owned the more return the investor receives.

Being a shareholder you become one of the many owners of a company. This gives you the right to a claim on all the company owns. You are entitled to a share in the company profits as well as the right to vote dependant if the stocks you have purchased through the stack market have voting rights included. The more stocks you own the more of the company you own and the more you can earn from the companies earnings.

A stock market can offer an investor 2 types of shares they are called Common and Preferred shares. As the name indicates the common share has little preference attached to it by the company. For example if the company you own common shares in becomes bankrupt or liquidate their assets you are the not going to receive any money until creditors and the preferred share holders are paid. You can see that owning preferred stock gives this option; however you do not get voting rights with preferred stock.

The stock market is a difficulty animal to understand; it can take a long time to grasp all the little quirks involved. By braking down the different section of the markets and focusing on understanding them individually it becomes much easier to grasp. Do not be daunted and take it a step at a time and you should master the markets.

Article Source: Main Articles

The StockMarket Genie will tell you how to trade. Download your free 7 part mini-course "What the Wall Street Hot Shots Don't Tell You!"

This article may be reproduced wholly or in part without written permission provided the byline, resource area, and any hyperlinks remain in order to give proper credit to the author.

Internet search engines and directory listings are imperative to your sites existence and success. Submit Your Website to the Searchen Networks directory and search engine to achieve authoritive inbound links.

Please Rate this Article

5 out of 54 out of 53 out of 52 out of 51 out of 5