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Trading |
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The term trading is closely related to the stock market. Majority of stocks are traded on exchanges. A stock market or exchange is a place where buyers and sellers assemble and settle on a price. A stock market is an organization which allows you to trade shares physically. In physical trading the traders are seen throwing their arms up, shouting, waving, and signaling one another. You can also indulge in virtual trading. A virtual trading exchange is composed of a system of computers where trades are made by machine. Trading allows you to buy warrants, bonds and other financial products. The investors can buy and sell shares of different companies in a stock market. The investors are represented by stock brokers.
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The intention of a stock market is to assist the trade of securities between buyers and sellers. It also reduces the risks of trading and investing. A stock market can be broadly divided into two types of market, one is the primary market and the other one is the secondary market. When people talk about the stock market, they usually refer to the secondary market. In secondary market, the trading of the stock of accompany do not involve the company directly.
A primary market is such a market where securities are created by means of an initial public offer or IPO. However, in the secondary market, investors’ trade earlier issued securities without the participation of the issuing companies.
In The United States of America, stocks are listed to the New York Stock Exchange or NYSE and NASDAQ. A few years ago, a stock which is listed in any of the stock exchanges is not allowed to list itself on the other stock exchange. However, this law has been lifted recently. You can also trade at new type of exchanges which are called ECNs or Electronic Communication Networks. Examples of ECNs are Instinet or Archipelago.
Some of the popular stock exchanges of the world where you can indulge in trading of stocks are The Nasdaq, The New York Stock Exchange, American Stock Exchange or AMEX, London Stock Exchange, Bombay Stock Exchange or BSE, National Stock Exchange or NSE and many others.
Many major foreign companies of the world list them both at the U.S. stock exchange and also at the exchanges which are available at their home country. The companies which wish to list itself in the U. S. stock exchange need to give out certain percentage of its principal to the U.S. the companies need to put the money in the U.S. bank.
The companies usually list themselves in several stock exchanges of the world to increase its investor base. It helps the investors and buyers from all over the world to indulge in trading. Many companies of the United States of America also list themselves in several other foreign exchanges of the world to build capital. They too posses the same motive as other companies. Increasing investor base is the primary reason behind listing a company in various exchanges.
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