We may have heard that investing in stocks can be a great way to create wealth, that's true but do we really know how the stock market works? Do we know the difference between , stock,stock exchange and stock index?
The stock market can seem like a very complex and confusing place. It doesn't have to be. The basics of stock market are less complicated than we might think. I know you think that why i share this boring theory here, but believe me Before going to start new things first better to know the basics. Things become easier when we grasp the basic concepts.In my last post i shared some terms like Sensex, NIFTY, BSE, NSE.
Today I'll try to explain about stock, share, stock market, how it's work , how price determine.
Before we get into stock market , we need to understand stocks and how they work on a basic level.
Stock represent ownership in a publicly traded company , when you buy a company's stock , you become part - owner of that company. Stock referred to as equities or equities securities. Ex : if you buy a share of Apple, you own a small part of the business and get to share in the company's success.
A share represents a unit of equity ownership in a company.
Stock represent the holder's part-ownership in one or several companies. Meanwhile, share refers to a single unit of ownership in a company.
Stock market on exchange are governed by supply and demand chain.
At any given time , there's a maximum price someone is willing to pay for a certain stock, known as the bid price. There's also a minimum price someone else is willing to set for the shares of stock, known as the ask price.
Think of stock market trading like an auction, buyers are constantly bidding for the stocks that othet investors are willing to sell.
If there is a lot of demand for a stock, investors will buy shares quicker than sellers want to sell. This can move the price higher. On the other hand, if more investors are selling a stock than buying , the market price will drop.
There are plenty of catalysts that can push the market up or down. For example, in the recent stock market downturn, big reasons for the market's poor performance included inflation pressure, supply chain issue , rising intrest rates, and recession fears. These factors resulted in more investors selling stock than buying, which is why we saw stock prices generally decline.
We can sell or buy a stock on our demat account.
I hope today's information is somehow beneficial for you.
@mysteriousroad