An Overview about Stock Market for Beginners
Many people may heard about the term “stock market”, however, many are still confused of what it means especially for those who do not have financial expertise. What most people think is that when trading on the stock market, companies can have a flourishing or bankrupt businesses depend on how they on the “stock market game”. Simply put, stocks depicts the company’s profits and assets. The amount of all the profits gained by the company from the stocks will be divided per annum in the form of a dividend. To give you an example, if a company gains a profit of $300,000 this year, and it has 15 shareholders holding 1 stock each, then each shareholders would receive a dividend of $20,000.
Definition of Stock Market
The stock market or “stock exchange” is a financial institution where a licensed broker trade company stocks and other securities that are authorized for trading by the exchange. These exchanges can occur virtually or physically. Brokers buy and sell stocks based on the needs of the companies or individual they represent.
There are two types of stock market, these are the Primary Stock Market, this is for trading of IPOs or Initial Public Offerings and also other brand-new issues by the sellers and buyers; the Secondary Stock Market, this is for trading of existing stocks in the market by the buyers and sellers.
You can be able to understand the trends in the stock market by starting to learn the meaning of common stock market terms and be able to give an assessment to stock market charts. By taking time learning the basics of stock market, it will help you to be a more knowledgeable investor.
1. The Stock Price
This depicts the value for which stocks are purchased and sold. Some factors that can affect the stock prices are the current performance and expansion and future growth. So if a company is making badly in the stock market, it is expected that its stock prices will reduce in value. While the company performing well in the stock market, the stock prices will increase in value.
2. 52-Week Period and Its High and Low Prices
This is made up of stock data in a period of 52 weeks. On the date of reporting, you will see which of the stocks have the highest and lowest prices throughout this 52 weeks.
3. The PE Ratio
This value is determined by dividing the newest stock price by the average earnings per share for the last four quarters.
4. Trading Volume
This is the overall selling and buying transactions that have taken place during the day.
5. The Closing of the Stock Market
This is the last quoted stock price during the closing day of the stock market.
6. The Net Change
This is the difference in price of the stock since the last change that happened. The Net Change allows you to see the direction in which the stock price is coming. Plus symbol indicates a positive direction and a minus symbol indicates a negative direction.