What are stocks and how to trade them
The stock market or securities market is one of the main representatives of the financial markets, allowing trading in securities of companies, which include shares, bills, investment units. These instruments are bought and sold through stock exchanges. These exchanges facilitate the interaction of trading participants, regulating the rules and conditions of settlements.
The stock market also has a set of indices that track the general state of country exchanges and serve as their indicator of economic sentiment. These complex indicators are calculated based on the selection of the most liquid shares and bonds of companies included in the index.
Companies use the stock market to raise capital by selling shares to investors, allowing them to finance operations and expand their businesses without incurring debt. In exchange for being able to sell shares to the public, companies are required to disclose information and involve shareholders in business decisions.
Investors benefit from the stock market by exchanging money for shares that can appreciate in value over time, resulting in capital gains. Additionally, as companies grow and make profits, they can distribute dividends to their shareholders. While the performance of individual stocks can vary, the stock market has historically provided investors with an average annual return of approximately 10%, making it a relatively reliable method of increasing wealth.
Another way to make money in the stock market is to speculate on the price of a particular company's stock.
The most famous stock exchanges include:
- New York Stock Exchange (NYSE)
- Euronext - The largest stock exchange in Europe
- London Stock Exchange (LSE)
- Tokyo Stock Exchange (TSE)
- Hong Kong Stock Exchange (HKEX)
- Moscow Interbank Currency Exchange (MICEX)
Conclusion: Stock trading can be an important part of your investment strategy, providing opportunities for capital appreciation, dividends, and portfolio growth. However, it is important to conduct thorough research, learn how to manage risk, and stay current with market events and the economic performance of the stocks you trade before investing in this area.
