What is the Stock Market? Concept of stock market and its types.

 What is Stock Market ?

In technical analysis The stock market index refers to the collection of markets and exchanges where there are regular real time activities of buying, selling and issuing shares of publicly held companies. Such financial activities are conducted through institutional formal exchanges or counter marketplaces that operate under a defined set of rules. A country or a region may have multiple stock trading venues that allow transactions in stocks and other forms of securities.

 

What is the purpose of the stock market?

 

 The primary purpose of a stock market is to regulate the exchange trade funds  of stock as well as other financial assets. Such regulation ensures a fair environment not only for investors, but also for corporations whose stock markets are traded.

 

concept of stock market

 

The most basic concept for the investing in the stock market is the idea that each share of stock represents a small share of ownership of a corporation. While most businesses are set up by small groups of people, when a company "goes public" its owners decide to sell shares of stock and, in return, receive cash from buyers.

 

Types Of Stock market
 

·         Income Stocks

·         Cyclical Stock

·         Blue-Chip Stocks

·         Tech Stocks

·         Speculative Stocks.

·         Defensive Stocks

·         Growth Stocks

 

 
How does stock market works?

 

In the 1600s the Dutch East India Company employed hundreds of ships to trade gold, porcelain, spices, and silks around the globe. But running this massive operation wasn’t cheap. In order to fund their expensive voyages, the company turned to private citizens– individuals who could invest money to support the trip in exchange for a share of the ship’s profits. This practice allowed the company to afford even grander voyages, increasing profits for both themselves and their savvy investors. Selling these shares in coffee houses and shipping ports across the continent, the Dutch East India Company unknowingly invented the world’s first stock market. Since then, companies have been collecting funds from willing investors to support all kinds of businesses. And today, the stock market has schools, careers, and even whole television channels dedicated to understanding it. But the modern stock market is significantly more complicated than its original incarnation.

 
what is stock exchange

 

                 York stock exchange , securities exchange, or bourse  is a facility where stockbrokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments. Stock exchanges may also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividends Securities traded on a stock exchange include stock issued by listed companies, unit trusts,  derivatives, pooled investment products and bonds.  Stock exchanges often function as "continuous auction" market makers with buyers and sellers consummating transactions via open outcry at a central location such as the floor of the exchange or by using an electronic trading platform. The Federal Reserve Bank of New York is one of the 12 federal reserve  of the united state.

 

 

how investors use the market today?

 

 

 Let’s imagine a new coffee company that decides to launch on the market. First, the company will advertise itself to big investors. If they think the company is a good idea, they get the first crack at investing, and then sponsor the company’s initial public offering, or IPO. 

 

This launches the company onto the official public market, where any company or individual stock who believes the business could be profitable might buy a stock. Buying stocks makes those investors partial owners in the business. Their investment helps the company to grow, and as it becomes more successful, more buyers may see potential and start buying stocks.

 

 As demand for those stocks increases, so does their price, increasing the cost for prospective buyers, and raising the value of the company's stocks people already own. For the company, this increased interest helps fund new initiatives, and also boosts its overall market value by showing how many people are willing to invested in stocks in their idea. However, if for some reason a company starts to seem less profitable the reverse can also happen.

 

 If investors think their stock value is going to decline, they’ll sell their stocks with the hopes of making a profit before the company loses more value. As stocks are sold and demand for the stock goes down, the stock price falls, and with it, the company’s market value. This can leave investors with big losses– unless the company starts to look profitable again. This see-saw of supply and demand is influenced by many factors. Companies are under the unavoidable influence of market forces– such as the fluctuating price of materials, changes in production technology, and the shifting costs of labor.

 

Investors may be worried about changes in leadership, badpublicity, or larger factors like new laws and trade policies. And of course,plenty of investors are simply ready to sell valuable stocks and pursuepersonal interests. All these variables cause day-to-day noise in the market, which can make companies appear more or less successful. And in the stockmarket, appearing to lose value often leads to losing investors, and in turn, losing actual value. 

 

Human confidence in the market has the power to trigger everything from economic booms to financial crises. And this difficult-to-track variable is why most professionals promote reliable long term investing over trying to make quick cash. However, experts are constantly building tools in efforts to increase their chances of success in this highly unpredictable system. 

 

But the stock market is not just for the rich and powerful. With the dawn of the Internet, everyday investors can buy common stocks in many of the exact same ways a large investor would. And as more people educate themselves about this complex system they too can trade stocks, support the businesses they believe in, and pursue their financial goals. The first step is getting invested.

 

 What is bid ask spread ?

A bid-ask spread is the amount at which the asking price for a property in the market will be higher than the bid price. Bid-pass expansion is the difference between the highest price that a buyer is willing to pay for property and the lowest price that a seller is willing to accept.

 

 

Profit of stock market

 

Investors can wall street benefit from buying stocks in one of two ways. Some stocks pay regular dividends .Another way investors can capital gain from buying shares is if the price of the stock rises above their purchase price, by selling their stock for a profit.