OUR BLOG POST
How the stock market works
06/03/2011 06:50:00 PM
In order to understand how a stock market works it is essential that we know it s background. The privately owned corporations were established during the early 19thh century in the western countries. Initially the investments for the growth of the company are usually done by the owner but as the scarcity of funds arose, dependence on public for fund increased.
This led them to persuade other people like banks and other investors to invest in their business. This can be done either way i.e. issuing bond (taking loans) or by giving them an ownership thru selling shares. This paved the way for the establishment of a centralized location where trading stock took place. The Stocks are a share of the ownership within a company thus the public stock market was born.
The stock prices are set by several market factors including the health of the economy trading and spending trends, financial reports of a company. The buyers makes offer called 'bid' and the sellers list their prices called 'ask' and then the actual value of the stock rises and declines in value. The fluctuation of the price of the shares is most crucial. The state of economy and market as a whole also affects the price of the stock.
The stock market usually is driven by demand and supply method. That is the number of shares stock dictates the supply and the number of shares that the investors will buy decides the demand. In another word the stock market is like a super store and simultaneously an automated one where every on goes for buying and selling of shares. It is important for our knowledge that every share that is bought there are two parties the seller and the buyer.
The crucial roles in the stock market are played by the exchanges. It is at the exchange where the sellers and the buyers' prices are matched and transaction takes place accordingly, thus leading to trading and helping in deciding the price of the share. But how each stock market works solely depends on its internal organization and the government's regulation.
The New York Stock Exchange (NYSE) is a non-profit organization whereas the National Association of Securities Dealers Automated Quotation (NASDAQ) and Toronto Stock Exchange (TSE) are profitable body. They earn money in exchange of the service they provide .However the NYSE and the NASDAQ are the primary exchange.
In the initial years long ago the transactions are done through traditional exchange but now almost all the transaction and trading is done through NASDAQ that uses ECN (electronic communication networks) and thousands of other firms have access to the NASDAQ and facilitates trading.
Thus in a nutshell the stock exchange is a kind of market that facilitate monetary transaction between interested parties and the work reduces distribution costs and set price and the broker places the trade s through computer program and software
Posted by Dave Harrison, Director - Training Programme, VisionTraders.com
Trading Forex Market Profitably
16/02/2011 09:18:00 AM
Forex Market trading can be defined as an investment scheme that involves currencies and also stocks and similar forms of goods.
One of the important considerations in the forex trading is the value of the currencies of various nations of the world as they determine whether an investment is profitable or not. However the rate or the value of the currencies depends on the economic performances.
The forex market trading has been in use for about 3 decades now and is quiet popular. Compared to the stock market the forex trading is considered larger in scale and as close 2.5 trillion dollar transaction takes per day.
As more and more people each day gets inclined to the investment it is likely that the volume of this monetary amount will increase. The continuing popularity of this trading can be attributed to the availability of satisfactory information in the internet. It is a quiet attractive venture to get involved in.
However the possible benefit or profit from Forex Market can be incredible too.Forex trading is the path to direct access to the foreign currencies .In fact it can benefit someone with huge profit.
The various forex programs accurately and minutely studies the market data around the clock and act accordingly and thus helps in avoiding losses. If a profitable trend gets revered with the help of these software's in place the bad investment is traded away and reducing the loss to the minimum.
During 1929 when the stock market collapsed huge losses were incurred by the investor and business men. But in online Forex Trade Market there is no chances of it as there is no way the market can crash. As when we buy a certain currency we also sell a particular currency against it.
Therefore when certain currencies value fall automatically the other rises. So this is the most important advantage of the Forex Trading. Unlike the other markets where in some instances almost all traders losses money with Forex Trading there are always a possibility that traders make profit and can avoid losses with the help of software that forecast the prevailing market condition.
There are certain benefits also as that contributes to profitability those are:
1. There are no middle men involved that can take a percentage that reduces ones income
2. Forex trading is consist of a margin investment thus increases the chance of higher profit.
3. The forex trading is set according to ones convenience and one can choose the amount he /she will invest.
4. Only in Forex trading there are no government fees, brokerage commission, exchange fees thus avoiding unnecessary cost.
5. There is high liquidity as one can buy and sell currency at any time and place.
6. Because it is a world wide transaction it is open for 24 hours
Posted by Dave Harrison, Director - Training Programme, VisionTraders.com
Investing in Stocks and Share
02/02/2011 11:01:00 PM
Stocks are volatile by nature. But during the long term and over a period of time, stocks also typically appreciate faster than any other type of asset. That is the reason why investing in share for a long term basis is beneficial.
As because when someone buys a share of a company she/he becomes the part and owner of the company thus gains the opportunity to be the part of the company's wealth. But however investments in shares are not easy as investing in nationalized banks. If someone invests in shares he /she bear certain risk.
During the volatile condition of the market the value of the shares may dramatically increase or decrease and the investor s might undergo a loss. Investing on a company's shares makes one eligible or entitled to the company's dividend. There are two types of share issued by company:
1. Equity shares
2. Preference shares.
For investing in shares one must have DEMAT Account and documents like: Pan Card, ID Proof and a bank account displaying 3 months transaction status. Investing in a share is ruled by the market condition. The investor should speculate the market condition as there are no strict method to invest in shares' proper budgetary plan is to be made also.
Before investing in any firm it is important to know its market and expected return also. Analyzing the balance sheet of the company is also important as is to know the net profit after deduction of tax. The net profit of the company helps the investor know the capacity of the payment or dividend to the shareholder. Lastly the most important is the credentiality of the company one is investing on (260).
We have learnt from the history that owning stocks is one of the most easiest and profitable way to earn wealth over a long period of time Stock are ownership in a corporation one can buy thousand of stocks.
Owning a stock of (300) a company makes one a part of it. The profits received are the difference between the price one bought and sold the stock. How ever a stock does not have an absolute value. At any particular time its value depends on whether its shareholder wants to hold the share or sell it and what the investors will pay for it.
If the stock is hot and huge number of parties wants that share automatically the price rises and similarly when a company is doing poorly the value of the share goes down thus this stock may have to suffer drop of value.
Some stocks are undervalued too that is they are sold at much lower rate than are speculated by the experts. One of the reason why people incurs loss Is because they do not know the business of selling and buying and has the urge to earn quick and makes wrong speculation .Lastly, Patience and prudence is the success key for a investor.
Posted by Dave Harrison, Director - Training Programme, VisionTraders.com
