HOW THE STOCK MARKET WORKS

WHAT IS A STOCK?

Companies need money to help them grow

They use it for all kinds of things,like buying materials to make their products , developing new products, building plants and hiring people to work.

To raise money, companies often split ownership of the companies into smaller “shares” that they sell to the public.the shares are also called “stocks”

HOW DOES IT WORKS??

-A stock exchange is an institution which hosts a market where traders can buy and sell stocks. -Traders make money by buying the stock before the price goes up,and then they sell it before it goes back down.

-The price of the stock reflects the available information about the financial health of the company. -Traders watch the stock rise and fall and make decisions to make a profit.

HOW TRADERS MAKE MONEY:

-If you sold your stock on a day when the price of that stock is higher than the price you paid for it, you would make money.

HOW TRADERS LOSE MONEY:

-If you sold your stock on a day when the price of that stock falls below the price of you paid for it,you would lose money.

INTERESTING FACTS:

Approximately 630000 companies are now trade publicly in the world.

ADVANTAGES OF INVESTING STOCK MARKET:

1.chances of exceedingly good return in short time,even in the past people have gained exceedingly good returns on their stock market investments.

2. We always have a good chance to earn huge profits when we decide upon stock market investing

3.when we invest in stock market although we put ourself at lot of risks ,we are also in a position to earn good returns in very short time.

DIS ADVANTAGES OF INVESTING STOCK MARKET:

1.Volatile investments. Investment in BSE is subjected to many risks since the market is volatile

2. The shares of a comapany go up and come down so many times in just a single day.These price fluctuations are un predictible most of the times.

3.Brokerage comission kill profit margin every time an investor buys or sells his shares ,he has to pay some amount as a brokerage commission to the broker.

4. Time consuming. Investment in NSE is not as easy as investment in lottery as we have to compare many formalities in the process and hence is time consuming.