Understanding the Stock Market

The stock market has been a wealth generator as well as a source of funding for companies. The popularity of stock market as a source of funding and liquidity has increased tremendously, particularly due to participation in retirement plans such as IRAs and 401(k)s and there is more coverage of the markets by media sources. The terminology can sometimes be difficult to understand, but can often be simplified with some background.

The stock market is a market where people buy and sell stocks. The stock market doesn't really have a single building or physical store. When it comes to stock market, most people think of the New York Stock Exchange (NYSE) OR Wall Street. These places are just locations where much of the stock market activity takes place. They do not encompass the enire stock market.

"Stock" means money that a company has raised from individuals and organizations. To buy stock means to buy a part of a company called a "share." A person who owns stock is referred to as a "stockholder" or "shareholder." As a shareholder, when the company you buy stock in earns money, you will then receive a share of the profits. On the other hand, if the company you invest in loses money, then you won't even regain the money you invested. As a shareholder you will usually receive quarterly or annual reports that let you know how the company is doing financially.

How to Study the Stock Market

Open a virtual account that behaves exactly like a real one. Many brokers provide simulated stock market account. You can also play online games where you compete with other traders using virtual investing accounts. This will allow you to study and practice trading techniques without risking any money. Now that you have opened up a virtual trading account, you can buy stocks using your virtual account. Buy and sell stocks using the virtual account until you make profits consistently. Eventually you will learn other techniques as you improve and develop your own trading style. Wait until you have mastered the trading process before putting real money in the stock market.

Factors Affecting the Stock Market

There are several factors that influence the stock market including the economy at large, investor perceptions, current events and regulatory decisions. It can be difficult to determine what factors are influencing the stock market and individual companies within it. It is by thorough examination of the market that you can begin to understand how these factors are interrelated.

Considerations

It is advisable to study the stock market and gain a thorough understanding of the process before investing your money. When you participate in the stock market, you are competing in a complex financial setting with institutions and professional traders, many of whom have many years of experience. Because of this, it is necessary to become familiar with how it works before risking your money. There are resources to enhance the learning process. With focus and determination, you can learn how the stock market works and achieve success in your investing goals.