How Does The Stock Market Work?

You may have heard about stocks and shares from colleagues at work who have started investing money and seen great returns and you may now be wondering if it may be beneficial for you.

Before you rush into things here is some basic information on what the stock market is and how it functions and if you are seriously considering taking up trading then you might want to enrol on a stock market course to gain a deeper insight.

The first thing to understand about the stock market is that it isn’t just one individual market like the forex (foreign exchange) market but is split into different stock exchanges that are situated all over the world such as the LSE (London Stock Exchange), NYSE (New York Stock Exchange) and the Tokyo stock exchange.

Stock exchanges are not limited to countries either but can be made up of different countries within a certain geographical location such as the Euronext exchange which is based in Amsterdam but floats shares from companies in countries such as the UK, France, Portugal and Belgium.

Unlike the forex market which is limited to 20 currencies, the stock market has a large range of different international companies that float their stocks and shares on the various different exchanges, which makes it quite a challenge to choose the right company in which to invest in at the right time as there is so much choice available.

The way the stock market functions on a day to day level is actually quite easy. A company decides to go public and offers their shares to the public to buy. By buying a share or stock in the company, that investor owns a minimal percentage of the overall company. Once he decides to sell his shares he does so when the price is higher than when he paid for them, so in essence he buys the shares when they are at a low price and sells them off when they reach a higher price thereby making a profit.

In order to perform a trade you will need to choose a market broker who has the power to process trades as you cannot process them yourself. There is a small fee for this service but it is obligatory and you will also receive some expert knowledge and advice at the same time. It is also worth remembering that the stock market only functions from 9.30am to 4.00pm Monday to Friday and weekend trading does not take place.

If you are serious about trading you really should consider a stock market course to give you a more detailed insight. A stock market course can provide you with all the resources that you will need to start trading and also supply you with some important user experiences which are hard to find elsewhere.