How the Stock Market Works
The stock market works like an auction where investors buy and sell shares of stocks; These are a small piece of ownership of a public corporation. Stock prices usually reflect investors' opinions of what the company's earnings will be.
Traders who think the company will do well bid the price up, while those who believe it will do poorly bid the price down. Sellers try to get as much as possible for each share, hopefully making much more than what they paid for it. Buyers try to get the lowest price so that they can sell it for a profit later.
Where Is the Stock Market?
The two largest exchanges in the world are both in the United States. The New York Stock Exchange lists 2,800 companies.1 Combined, they are worth around $21 trillion in market capitalization—the value of all its shares.
Each exchange matches buyers with sellers, but they do it differently. The NYSE acts as more of an auction house because it matches the highest bid for the lowest sales price, and there is a market maker for each stock who will fill in the gap to make sure trades go smoothly. At the Nasdaq, buyers and sellers trade with a dealer instead of each other. It's done electronically, so trades happen in split seconds.
A third exchange, the BATS Global Marketplace, was formed to create a more efficient technology. Its goal was to avoid a flash crash like the one that hit the Nasdaq in August 2013.
There are also many small exchanges to serve specific types of traders. For example, "Dark Pools" like Liquidnet, cater to high-volume, frequent traders like hedge funds. Dark Pools hide their client's strategies from the competition, so they can not only ensure their anonymity, but can also match up large orders to avoid suspicion.
The major countries have their own stock exchanges for their domestic corporations. The five biggest are the London, Tokyo, Shanghai, Hong Kong, and Euronext exchanges
What is the Golden Rules for Investing in Shares
If you want to invest in stocks, then remember these four main things:-
- Choose the right company - Choose a better and better company that has earned at least 20% profit on the capital of its shareholders.Ideally a long-term investment (over 5 years) allows you to participate in the growth of the company.The performance of the stock in a short period (3 to 6 months) is driven less by the company's core principle and more by the market price. Whereas in the long run, the relevance of the right price decreases
- Be unsupervised - Investing in shares is a long learning process, in which you learn from your mistakes. These are some facts that can simplify this process.Diversification in investment - Do not put more than 10% of your fund in a single share, even if it is a gem, on the other hand do not invest in too many shares because they are difficult to monitor. 15-20 different stocks is good for a less active long-term investor.Use this asset allocation tool to find out if you need to invest extra from stocks.. Analyze your company's performance with its quarterly results, annual reports and news articles.. Find a good broker and understand settlement system.Don't pay attention to hot tips because if it really worked, we would all be millionaires.. Avoid the temptation to buy more because every purchase is a new investment decision. Buy as many shares of a company as per your total allocation plan.
- Monitoring and reviewing - Monitor and review your investment regularly. Keep an eye on the announcement of the quarterly results of the share taken and keep writing the correction of the share prices on your portfolio worksheet at least once a week. This work is more important for unstable times when you can get better opportunities to choose price.For example, find out how you can buy 1 rupee coins for 50 paise coins buy 1 rupee coins at 50 paise. Also check that the reasons you bought the shares earlier are still valid or your earlier estimates. And there has been a significant change in expectations. Also adopt an annual review process so that you can check the performance of equity shares within your total asset allocation.You can review RiskAnalyser if necessary as your risk profile and risk capacity may change over a period of 12 months.
- Learn from mistakes - During review, identify your mistakes and learn from them, because no one can beat your own experience. This experience will become your 'pearl of wisdom' which will surely help you to become a successful stock investor.
Stock Market Futures
What is Stock Market Futures?
In finance, a stock market index future is a cash-settled futures contract on the value of a particular stock market index. The turnover for the global market in exchange-traded equity index futures is notionally valued, for 2008, by the Bank for International Settlements at USD 130 trillion.
What time does the stock market Close
Regular trading hours for the U.S. stock market, including the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (Nasdaq), are 9:30 a.m. to 4 p.m. Eastern time on weekdays (except stock market holidays)